By Ray Birch
SCOTTSDALE, Ariz.—A number of credit union executives are questioning whether their CU’s marketing can help the organization effectively compete in the future.
In addition, a new study has also found “staggering” differences between what similarly sized credit unions are spending on compliance.
Those are some of the key findings from Cornerstone Advisors’ “What’s Going On In Banking 2018” report, which reveals that only 43% of credit union executives believe their marketing is “future ready,” a percentage that has dropped from the previous report (55%) one year ago.
“Less than half of the executives felt future ready,” said Senior Director Sam Kilmer. “These results address their feelings around competitiveness and effectiveness.”
Cornerstone Advisors surveyed 262 senior executives at U.S.-based mid-size financial institutions.
Deep Dive
Kilmer added that Cornerstone delved deeper, asking executives about the strength of their marketing content and delivery.
“Only 9% said they thought both were strong,” he said. “So, it’s really more like 9% really feel strong and future ready here.”
What Kilmer said the study shows is that credit unions need to place more resources into the “new world of marketing”—meaning more people and dollars. He also emphasized that money can’t be wasted in areas that don’t drive growth, and that compliance dollars should be carefully reviewed to identify waste.
Many credit unions, insisted Kilmer, need to “rearchitect” the front end of their marketing, doing more digitally and doing digital more effectively.
“Delivery is more of the issue than content,” said Kilmer, who added that mobile and online banking have become table stakes and that better use of social media and new, interactive digital channels is needed. “Two big parts of the delivery issue are resourcing/funding and analytics. For resourcing, CUs need to fight to get more than 16% of their marketing spend in digital and analytics. And, they should probably get their marketing resources more funded than some other areas.
“When you add up all of the money credit unions spend on what we call the new world of marketing—online channels and analytics—that 16% they spend here means less than one in five dollars of their marketing spend is going into towards new world marketing,” continued Kilmer. “Much more than that is going into community sponsorships and donations. Three times that amount is going into traditional media like billboards, newspaper and TV.”
Look To Future
Kilmer emphasized that dollars must shift toward the future of marketing, and that compliance spend, while necessary, is likely much larger than it needs to be at many credit unions. Kilmer said that the study’s data show that the difference between compliance spend at similarly sized credit unions can be “staggering.”
“Some credit unions are spending a lot of extra money on compliance,” said Kilmer. “At Cornerstone, we don’t disagree that you have to spend a lot of money here, but some are spending way, way, way more money than others.”
Kilmer said that a typical billion-dollar credit union is spending $1.3 million more on compliance than it needs to.
“We get that figure by comparing billion-dollar credit unions to those of the same asset size that are very efficient with their compliance spend,” said Kilmer. “Now, the typical marketing budget at a billion-dollar credit union is between $800,000 and $1 million. Therefore, it’s highly possible that what many credit unions are overspending on compliance is more than their entire marketing budget.”
Kilmer emphasized that credit unions should look throughout their operations for areas of waste and then shift those funds into marketing, especially digital channels and analytics, to help the CU grow and serve members better.
Small CU Compliance Spend
Small credit unions, while their budgets are often tiny, also tend to spend an inordinately high percentage of their funds on compliance, Kilmer added.
“It’s not an easy task for them, but small credit unions have to fight for the needed resources and allocate them properly,” he said.
Branch resources among all credit unions, as well, need to be examined carefully, Kilmer told CUToday.info. He said as more consumers turn toward mobile for daily transactions, and branch traffic slows, that head count for staff typically used for in-branch sales and marketing should be shifted to the internal marketing team.
“To do marketing effectively you need staff,” said Kilmer, who noted that while many credit unions say they have a marketing department, it is typically not a large team and that marketing is too often handled by many different people inside the credit union. Kilmer advised credit unions to add staff to their marketing team and apply greater focus to the area.