What if you started from scratch and built a credit union for the future? How much would it look like the credit union you already have? Rob Rubin spends a lot of time thinking about what consumers want from their financial institutions. That’s because, as founder of FindABetterBank.com and BankSwitcher.com, Rubin has literally made it his business to match people with financial institutions that meet their needs and to help them switch their automated transactions. We wondered what would happen if we flipped that equation around and asked what credit unions could do to address – and anticipate – consumer demand. Would we find that credit unions were already ahead of the game? Or, given a blank slate, would the new, improved future look decidedly different from the typical credit union of today? Weighing In In addition to his daily experience, Rubin drew from results of an online survey fielded on the popular personal finance blog, IWillTeachYoutoBeRich.com. Roughly 1,400 respondents – heavily represented by Generation Y, generally speaking, those born in the 1980s and 1990s – shared their experiences and opinions. Additionally, 25 were interviewed by phone, as were five credit union executives. “Our sample wasn’t representative of the general population,” says Rubin. “These are people who use a personal finance site and are, by definition, more interested and educated about finance than the average consumer. On the other hand, they’re a harbinger of what’s to come. They know what they want in a financial institution and are up to speed on what financial institutions can offer them.” A full report on these findings – along with suggestions on reaching out to Gen Y – is available from Filene Research Institute. Meanwhile, what should forward-thinking credit unions be building on today? 1. Focus on Youth This is not news, but it bears repeating. “The average age of a credit union member is 47,” says Rubin. “That’s past the time in life when consumers are looking to establish banking relationships, which generally occurs by age 30. Within the next decade, Generation Y will represent 40 percent of the workforce. Simply put, they’re the future.” So, the future is now, but remember also: Courting Gen Y consumers does not mean alienating your older membership. As Rubin points out, “One of the fastest-growing segments on Facebook is women over the age of 55. Baby Boomers are not technophobic. Many of the same features that attract Gen Y will appeal to Boomers too.” 2. Think Outside the Vault While not quite ready to scrap the concept of local branches entirely, Rubin predicts a radical shift in the way credit union branches are positioned and run. “Think of the way people check in at the airport,” he says. “There are friendly agents to answer questions and oversee transactions, but most people are checking themselves in on automated machines. This could be the credit union branch of the future: a bank of highly-sophisticated ATMs that allow most transactions to occur with a friendly staff member around to help if necessary.” Also, the location on Main Street with the giant, impenetrable vault? This might be overkill in the new reality. “Instead of the traditional storefront, branches may locate in office buildings or above storefronts on Main Street,” says Rubin. Thinking about branches in new, totally out-of-the-box ways could help credit unions free resources for services consumers really crave – namely, anything virtual. 3. Get Your Site Right “Many credit union Web sites are woefully outdated. For example, why would a CU Web site need to stream the local weather?” says Rubin. “No one is using your credit union’s site as a home page. They’re going there to do their banking or to find out about your products and services.” Need a role model? Check out INGDirect.com. “They have a straightforward presentation of their offerings, and it works,” says Rubin. “Your Web site should give the person visiting something to get jazzed about. Credit unions seem to resist the concept that they’re selling something, and they shouldn’t. Selling is the beginning of the relationship with a new customer.” Building virtual relationships is imperative in the market to come. Already, Gen Y survey respondents claim online banks as their primary financial institution at twice the rate of their Baby Boomer (born from 1946 to 1964) counterparts: 22 percent versus 11 percent for Boomers. Moreover, 86 percent of online banking users cited customer service as a reason they would resist switching banks, proving that excellent service is recognized even when it occurs virtually. Once you fix your Web site – think of this as a virtual storefront – it’s time to get comfortable with social media. This is where much of the personal interaction credit unions are famous for will take place in the future – and it’s more than just setting up a Facebook page or launching a blog. “Vantage Credit Union does a great job of interacting with members on Twitter,” says Rubin. “Members can register their accounts with Vantage and send direct messages to ‘myvcu’ to retrieve balances or transfer funds. Security for this program is excellent. And meanwhile, Vantage is reaching members on their own turf.” Online service is not an oxymoron. 4. Be Product-ive “A lot of online banking tools were invented with the idea of saving the institution the human resources necessary to perform a task; they were a cost-savings for financial institutions,” says Rubin. “But looking at technology this way creates the wrong perspective. Ideally, these tools should let consumers do new and different things that they never thought of before. From a consumer perspective, it’s not about saving the credit union’s time and money. It’s about getting a service they didn’t previously have.“ If you’re not familiar with it, take a look at SmartyPig.com. It’s an online savings program designed to help consumers save for a stated goal, allowing for shared contributions and featuring a social media component. So, someone could set up an account to save for a wedding, invite friends and family to contribute (say, in lieu of birthday gifts), calculate and track progress, and even receive ‘bonus’ dollars by shopping the site’s affiliated retailers, such as Amazon.com or Macy’s. It’s banking, but in a new package that makes it exciting and unique.” In order to create new, interesting, brand-able products, you’ll need a whip-smart development team. “Doing this right may mean developing core competencies that credit unions might not currently have,” says Rubin. Virtual products involve a particular hybrid of marketing, IT and operations. You need to divine consumer desires, translate them into usable tools, then communicate about them effectively – and each of these steps is a challenge in itself. Yet, developing this capacity may spell the difference between great branding and no branding in the not-too-distant future. 5. Stay in Character For all the ways credit unions will evolve in the years to come, some things will – and should – stay the same.“Credit unions are authentic,” says Rubin. “Gen Y consumers can sense insincerity in a nanosecond. If credit unions can present themselves as they are, it’s an advantage – they’re genuinely good.” Credit unions also do a superior job of keeping members happy once they’ve joined. An impressive 89 percent of survey respondents who use credit unions or community banks reported being satisfied with the service they received, and cited this as a reason they would stay with their current financial institutions. Less than 13 percent of community bank and credit union customers would want to switch away if there were no cost or inconvenience – compared to nearly 35 percent of big and regional bank customers. Keeping the connection with increasingly virtual members is a challenge. Financial education may be one way to stay engaged. Rubin notes that budgeting products like Mint.com and Geezeo.com – working in tandem with a financial institution – are of great interest to young adults. Creating programs that enhance financial planning efforts might carry a payoff. “What if a credit union created a credit card program that rewarded people for meeting their finance goals?” he asks. “That would be a great way to promote credit cards while reinforcing the message that credit unions work in their members’ best interests.”

Who’s Using Electronic Banking?
	Under 30	30 to 39	40 or older
Percent logging into online banking 4-plus times per month	84%	85%	73%
Percent using mobile banking 1-plus times per month	30%	29%	13%
Percent never visiting a branch	39%	36%	28%