In the Spokane Spokesman-Review this week, reporter Shawn Vestal compared the relationship consumers have with their banks to being in a loveless marriage. Like a good therapist, he asks the difficult questions first before giving the straight dope: “It’s time to dump the scoundrel.”
Vestal’s advice is to find someone who is a whole lot like a bank, but not: a credit union.
Since Bank of America’s $5 debit-card fee announcement, it seems a whole lot of people are taking Vestal’s advice, too. In Washington, Spokane Teachers Credit Union (STCU) saw a 24-percent increase in new membership, according to one report. Another report stated that BECU has taken on 7,000 (yes, seven thousand) new members since the start of October—including 700 in one day last week.
Oregon credit unions seem to be faring equally well, with some credit unions reporting as much as a 25-percent increase in new memberships.
Nationwide, credit unions are en vogue. And while some of these new credit union members will transfer their checking accounts, direct deposits, electronic bill pays, and even their credit cards and loans, many will not.
Television pundits, including coalitions involving some credit unions, are pushing the misguided belief that transferring a consumer’s financial life to a credit union is complicated and potentially even a danger to one’s personal micro-economy, because, “What if an electronic bill-pay is delayed? What if I forget to add one of my monthly payments during the change? What if?”
There are, of course, some forms to fill out, but becoming a credit union member—or opening an account, to use more bank-customer-friendly language—takes about 20 minutes. Some credit unions even allow consumers to complete the entire process online. And switching any direct deposit or automatic debit is as simple as knowing who should get what and when they should get it—and then telling the credit union. Similarly, many banks will conveniently close a customer's account right over the phone. A Portland blogger even wrote recently about how it only took her nine minutes to close her Bank of America account.
The bottom line is that switching to a credit union is easy. And this already-simple process can be made even easier with an equally-simple tool: a switch kit.
In many cases, credit unions are already providing what amounts to a basic switch kit—they're just not advertising it as such. They already help new members make all of the necessary notifications, fill out paperwork, and set up online banking, all in the name of easing the members’ mental strain and fear of the “what ifs.” Offering a switch kit just lets potential members know that a credit union is committed to being helpful.
Truth be told, a basic switch kit is usually nothing more than all the required membership paperwork stuck in a neatly-branded bundle. Sure, some kits include checklists and worksheets to help a new member through the transfer process, but the same amount and type of information is always needed. And yes, there is still a certain amount of legwork required of the member. He or she will have to provide proof of address, gather some basic information, fill out a few forms and sign some paperwork. But it’s easy.
Because as much as a switch kit might actually simplify the transfer process, the greatest benefit is the kit's ability to mitigate consumer anxiety about sealing the deal with their new primary financial institution. It helps to eliminate the common misconception that leaving a bank and joining a credit union is difficult.
The hard-copy, paper switch kits are the most familiar, but some of today’s digital switch kits have features that actually do make the process easier for the member, and not just less daunting for their psyche. These added features include auto-filling of primary information and contacting all of the necessary entities on behalf of the member to help with the transfer. BECU launched a self-service, online member enrollment application in early 2004 and has now been quietly (and dramatically) gaining new members online for nearly a decade.
In fact, switch kits have become so popular over the past few years that a cottage industry has even cropped up around their development. A quick search spotted three different vendors offering products. And of course, many credit unions create their own.
Offering simple steps to help a new member switch their deposit account and other primary financial accounts should be the long-term goal for credit unions. By providing this token gesture, credit union staff can use the switch kit to begin the process of transferring the “relationship” while helping ease potential members’ fears of all the typical break-up “what ifs.”
Questions or Concerns? Contact Matt Halvorson, Anthem Editor: firstname.lastname@example.org.