Members’ Primary Financial Institution (PFI) Choices

By Jon Haller
Director of Market Research
Credit Union National Assn.

As has been chronicled by countless numbers of previous CUNA studies, being your members’ primary financial institution (PFI) brings with it tremendous market-penetration, market-share and, as a result, bottom-line benefits to the credit union.

Moreover, being chosen as your members’ PFI serves as the second-strongest factor (among four factors) in yielding a “truly loyal” member for the credit union. Nationally, over half of those who rely primarily on a credit union for their financial needs ultimately fall into this highest loyalty level, according to CUNA’s upcoming National Member Survey Report.

The report shows that, all told, 43% of members consider their credit union to be their PFI – up ever-so-slightly from previous years. As might be expected, members’ likelihood of choosing the credit union as their PFI tends to rise as asset size increases, according to CUNA’s Member Survey Benchmarking Database (see figure). This pattern reflects, among other things, the tendency for a credit union’s range of services, marketing budget, and number of office locations to increase with its asset size.

The National Member Survey Report goes on to reveal that members who choose a credit union as their primary provider are noticeably more satisfied with virtually every aspect of the service-quality, service charges, and interest rates they receive from their credit union than bank-PFI members are with their bank. The sole exception is found among the two groups’ evaluations of their respective PFI’s convenience of location.

These findings suggest that many members are willing to withstand lower service-quality levels, higher fees, and/or less-attractive rates in order to have a nearby branch location.

As a result, credit unions looking to significantly increase their share of PFI members by leveraging their rate, fee, and service-quality advantages, alone, over area banks may experience only a limited amount of success in meeting this objective, unless these advantages are also components of an effective, more- encompassing overall brand strategy.

However, those credit unions employing a solid combination of clear competitive advantages, sound and successful branding efforts, and additional branch locations could put themselves in a strong position to compete more effectively for members’ – and potential members’ – PFI allegiances.

Click here to be notified by e-mail when the 2006-2007 National Member Survey Report becomes available in late-June.

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