The Impact of Members’ PFI Status
on CU Market Shares

By Jon Haller
Director of Market Research,
Credit Union National Association

Being your members’ primary financial institution (PFI) has many advantages, especially when it comes to attracting members’ other financial business. That is, for every financial service except student loans, credit unions’ market shares among their PFI members are higher--up to two times higher or more, depending on the product--than those for their non-PFI members (see figure).

And there is good news on the PFI front, as members are somewhat more apt to choose a credit union as their PFI than they were just two years ago--42% today versus 40%, according to CUNA’s 2002 National Member Survey Report. This pattern is consistent with those found in both CUNA’s member survey comparison database and the Filene Research Institute/Center for Credit Union Research’s report, Member Satisfaction Levels. The current 42% PFI level among U.S. adult members equates to 20% of all U.S. adult consumers.

Part of credit unions’ recent success in the PFI battle can be attributed to credit unions’ continued supremacy with respect to (member) satisfaction, their ever-growing expansion into remote-banking services, the rising prevalence of bank mergers (and the "unfavorable" experiences many consumers have endured as a result), and banks’ increasing fees.

One of credit unions’ greatest advantages over banks is their emphasis on including free (i.e., no monthly fee) checking accounts among their checking-program portfolio. In fact, over 65% of credit unions that provide checking services offer at least one free checking account to their members, according to CUNA’s 2002 Fees Survey Report. By comparison, just 28% of banks/savings institutions can make this same claim, according to the Federal Reserve’s Annual Report to the Congress on Retail Fees and Services of Depository Institutions.

If you’re among the one in three credit unions that don’t offer any free checking accounts whatsoever, consider adding one--a non-interest bearing account. The increase in checking users and the resulting increase in members turning to your credit union as their primary provider will lead to increased loan volume and the financial benefits this brings, as well.

In addition, use member surveys to periodically measure and monitor your credit union’s success in its efforts to raise its member-PFI levels. Also monitor your members’ reasons for not choosing your credit union as their primary provider, and make any necessary adjustments to better persuade them to switch their PFI relationship to the credit union.

Next month’s topic: CUs' use of member satisfaction information to determine staff bonuses

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