Members’ “Outside” Deposits Provide Opportunities

By Jon Haller
Director of Market Research
Credit Union National Association

As the economy gathered strength in 2004, loan growth increased and savings balances slowed, with deposits in credit union money market accounts and IRAs taking the biggest hits. Total credit union savings growth stood at 5% in 2004 – it’s lowest mark since 1999, according to CUNA Economics & Statistics – and is projected to be 6% for 2005.

Whether your credit union is fortunate enough to be among the minority who are performing extremely well in the loan-volume department (e.g., recording a loan-to-share ratio of 85% or more), or if you’re simply in deposits-generation mode, chances are many of your existing members have large amounts in savings outside of your credit union – members that you can target to attract additional funds.

Whereas one in five members have no savings outside of their credit union, according to CUNA Research’s Member Survey Benchmarking Database (that is, they save exclusively at the credit union), an identical proportion have $20,000 or more saved elsewhere (see figure).

While your older members and your higher-income members will typically serve as two of your primary target markets for your deposits-generation efforts, you may or may not realize that your largest depositors are also an attractive group to focus on. That is, members who have large amounts in savings at the credit union often have large amounts elsewhere. It is not unusual for us to find that up to half of members who have $20,000 or more at the credit union have $20,000 or more with other providers, as well.

Staying on top of members’ satisfaction with your savings services, your market shares of your members’ CD, money market, and IRA business, and their reasons for turning to other providers for these accounts can assist you in your efforts to attract more of your members’ funds.

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