By Ray Birch
ARLINGTON, Va.—While CUNA and NAFCU acknowledge a recent national survey of Americans found perceptions of service at credit unions trails that of banks, both organizations are saying evidence of the perceived decline is not apparent in other credit union data.
As CUToday.info reported, credit unions for the second year in a row have fallen behind banks when it comes to consumer satisfaction, they also now sit at a “historic low” in one respected national survey.
Credit unions fell 2.5% to a score of 77 on a 100-point scale in the 2020 American Consumer Satisfaction Index (ACSI) conducted by the University of Michigan in conjunction with the American Society for Quality in Milwaukee and CFI Group in Ann Arbor, Mich. The nation’s banks achieved a score of 78.
As CUToday.info also reported, for the first time in the history of the survey, in 2019, fell behind banks for customer satisfaction. Meanwhile, the 77 satisfaction score given credit unions by Americans in 2020 is the lowest ever and 10 points below the peak CU score of 87 in 2011.
NAFCU Chief Economist and VP of research Curt Long said the ACSI report is simply one survey and that NAFCU continues to see—despite a slowdown from the pandemic—strong credit union performance.
Curt Long
“There are always surveys,” said Long. “I think when you get survey results you have to line them up against the data you know to see how telling the survey data really is. I think you just consider this ACSI survey data alongside what we all have been seeing up until 2020 and the health crisis—really strong membership growth.”
But as CUToday.info reported here, CUNA Mutual’s most recent Trends Report found membership grew by a modest 47,000 in October (0.04%), much slower than the 252,000 added during the same period one year earlier.
Voting With Their Feet
Long pointed to NCUA Call Report, NAFCU survey and Federal Reserve data from late in 2019.
“In those last couple of survey cycles before the pandemic, credit union gains in many areas of the market, and not just membership, were really broad. They showed credit unions were gaining market share from banks…,” shared Long. “If I had to put more weight on one or the other, I think I'd have to consider the data that show credit unions are continuing gain market share and people are voting with their feet.”
Statistically Significant?
Mike Schenk, deputy chief advocacy officer and chief economist at CUNA, agreed with Long that the credit that union performance data suggests CU service is not slipping. Schenk also cited a CFI Group study, as well as others, that indicate credit unions still outperform banks when it comes to consumer satisfaction.
“My first reaction (to the ACSI study) is, is the one-point difference between banks and credit unions—77 and 78—statistically significant?” said Schenk.
Mike Schenk, CUNA
Schenk said what is more important to him is the ACSI study conflicts with other consumer satisfaction reports he has seen.
“The data that (ACSI) is presenting is it odds with all the other data that I've seen from just about every other research outlet across similar measures, and in particular the CFI Group,” said Schenk, adding the CFI Group is affiliated with ACSI and uses survey methodology very similar to ACSI. “The CFI Group did a consumer satisfaction study over the same period as the ACSI study and credit unions came out four points higher than banks. I'm not exactly sure why the difference exists, but that’s significant that two research groups, somehow affiliated, are telling a different story.”
A Capital Difference
Schenk noted service ratings for for-profit institutions tend to fall during periods of economic contraction and expand during periods of economic expansion. He stressed this happens because banks are beholden to shareholders and take steps to keep profits as high as possible during tough times, which can penalize consumers. On the other hand, Schenk said, credit unions tend to look at capital as a war chest to be used during difficult times to help members, as they have during the recent pandemic-driven recession.
It is notable, however, the latest ACSI report shows credit unions—despite all of their efforts to provide payment forbearance and waive fees during the health crisis—slipped more than banks in service ratings during the early months of the recent recession. David VanAmburg, managing director at ACSI, told CUToday.info, the finding may be the result of consumers rating their financial institution more on daily transaction performance, such as ease of use, instead of extra efforts to help consumers’ bottom lines.
VanAmburg, too, stated in a previous CUToday.info report, the steps being taken now by CUs to help members through the pandemic may likely result in higher CU
Data Not Being Ignored
While other surveys have turned up more positive results for CUs, Schenk said credit unions are not ignoring the ACSI data.
“I guess I wouldn't just simply dismiss the study, and I do think that credit unions when they see that data are concerned and they take notice,” he said.
VanAmburg believes credit unions have good reason for taking notice. “ACSI's data is clear about a decline in (credit union) satisfaction, slow, but steady over several years,” he said.