Why the Credit Union May Be the Perfect Form for a Financial Institution
Oct 25, 2023, 20:25 ET
Written By Matthew Preuss
Pick up any trade publication aimed at the credit union space, and you'll find plenty of love letters to these institutions. If you know anything about the financial services business, it's easy to see why.
While every financial institution is a business enterprise and lives or dies by its ability to generate a return on its assets, the credit union didn't start out of a desire to generate a financial return. These institutions were founded to meet a need in the communities they serve.
Initially, many of these communities were groups of co-workers who needed a better way to manage their money and borrower against new homes and cars.
Many of these love letters are written by vendors who want to provide products or services, and we understand that. But we have our own reasons for loving these institutions.
Three reasons credit unions are great financial institutions
We've been working with credit unions for many years, providing a range of risk mitigation and outsourced risk resolution services. We now enjoy strong relationships with many of these institutions, which has led us to the following conclusions:
- They understand their customers because they are their customers
Member-owned means something in the credit union industry, and you can feel it in every transaction. Maybe it's their non-profit status or something that carries over from their inception, but they don't look at the people entering their branches the same way other institutions see their customers.
For years, people have been trying to quantify this. To isolate the secret sauce that sets customer service in the credit union apart from and ahead of others in the space.
But the difference is easier to see when a member gets into trouble. While we now offer a range of products and services for the auto lending and appraisal teams within the credit union, our core services are in the default servicing department.
It's the way credit unions treat members who get behind or fall off track that really sets them apart. When they contract with NCCI to hand-deliver an offer of support letter to one of their members, they know that our professional team of field services professionals will handle every encounter with compassion and respect.
- They pursue member satisfaction ahead of institutional growth
Over the past few years, financial services companies of all kinds have seen the value in providing better customer satisfaction, but this is something that has been a high priority in the credit union since they were founded.
For credit union executives, member satisfaction isn't a nebulous metric that can only be measured in terms of the institution's growth. It's a very clear measure of performance that is not tied to growth at all.
That translates to more affordable services because they know if they can offer a member an AVM valuation NCCI derived from one of the top-ranked algorithms on the market, they may be able to save them the cost of a full appraisal. That yields a more satisfied member.
- They understand loyalty and the importance of relationship
Unlike some other types of institutions we serve, where the value is often delivered in the volume of work they order, credit unions create value through loyalty. We know that if we serve a credit union well, we'll have a relationship that lasts for years.
We know this because we provide credit unions with portfolio valuation and monitoring services. They buy them because they want to know what's going on with their members' assets to better inform the offers they send them. It also informs them when a member puts their home up for sale, giving them the opportunity to reach out and keep that member from going to a competitor. It's a great way to maintain and deepen a relationship with the credit union member.
An institution that goes to those lengths to take care of the people they are in business with makes them a great partner for anyone lucky enough to serve them.