Credit Unions Slipping in Customer Service

Banks beat credit unions in almost every area of customer experience.

Credit unions used to be known for their stellar service. You could go to your local credit union and meet with a friendly staff member who would get you a loan for a used car or help you open a savings account. But a survey shows that credit unions are now lagging behind banks in most customer service areas except this traditional in-person service.

“Credit unions continue a long, slow decline in member satisfaction that is now in its fifth consecutive year,” Forrest Morgeson, Assistant Professor of Marketing at Michigan State University and Director of Research Emeritus at the American Customer Satisfaction Index (ACSI), stated in the survey. “Rapid membership growth fueled by the pandemic and ongoing industry consolidation may be leaving customer service behind.”

Credit unions still excel at in-person service, the ACSI survey found. In fact, credit unions are often recommended by financial professionals to consumers who need personal help rebuilding shaky credit or obtaining a loan. They have a solid B (86 out of 100) on metrics such as: courtesy and helpfulness of tellers and other staff and speed of in-branch financial transactions. They also scored well on the quality and reliability of their mobile apps and websites.

But scores start to lag in a variety of other areas, with banks easily winning out. Here are some areas where banks are currently surging ahead of credit unions when it comes to service:

• Variety of financial services available – Credit unions score a C-plus (77 percent) on the mix of services available, including credit cards, debit cards, checking and savings accounts and loans.
• Ease of dealing with accounts – Credit unions score a C (75 percent) on the ease of understanding information about accounts, and a 76 percent on the ease of making changes to accounts.
• Competitiveness of interest rates – Credit unions score a C-minus (72 percent) on the competitiveness of interest rates.
• Number and location of branches and ATMs – And they score a D-plus (68 percent) on the number and locations of branches and ATMs.

That’s partly because “credit unions no longer have the finances or technological firepower to compete,” according to the Credit Union Times. “The number of credit unions has dwindled from a high of 23,866 in 1969 to just over 5,500 today, thanks to business failures, consolidations and mergers. From 1970 to 2011, there were an estimated 13,000 credit union mergers.”

Due to fast-moving technological developments in the banking industry, banks can outcompete credit unions on fast loan approvals and automated processes that offer ease and convenience, according to CU Times. “But by leveraging their banking charters, working with fintech partners and adopting real-time payments (RTPs), credit unions can cement their claim in the future of financial services.”

As customers begin to expect more and better service from their financial institutions, credit unions may continue to find it harder to compete with national and regional banks unless they take some of those steps.

Otherwise, they may need to lean into their strength of in-person interactions built on friendliness and helpfulness tailored to the individual. And banks may need to exploit their many advantages, including a bigger variety of products, services and locations.