The Filene Research Institute just issued a Research Brief, "What People Pay: Deposit Account Fees at Banks and Credit Unions." [http://filene.org/publications/detail/whatpeoplepay] This was my comment:
The brief is encouraging and surprising. Given that most consumers know little of and care little for the difference between credit unions and banks, pricing often becomes the consumer's primary decision tool. Forget for a moment that my former credit union's free share draft account was not enough to convince many eligible consumers to switch from a regional bank their parents had done business with forever. A dose of reality hit me when another regional bank, Barnett, mocked by CU employees for its long list of fees, was able for a time to beat many local CUs on car loan and CD rates. It became apparent that their fee income enabled them to beat us on core business. (Barnett became Nations, then Bank of America.)
The challenge for today's credit union leaders is to develop strategies to remain competitive on pricing while establishing the kind of differentiation that resonates with and captures the hearts and wallets of qualifying consumers. Simultaneously, CUs need to continue the tax exemption to ensure a small amount of price difference. A single regulator will further erode if not obliterate CU and bank differences. There may be a chance to shine under the proposed national consumer protection agency.
U.S. consumers' lives will be adversely affected by a lack of credit unions. Becoming indistinguishable from banks or going out of business entirely will be the same for consumers. Filene followers and other leaders need to see beyond the economics and issues of 2009 and 2010 to ensure that future generations will know and appreciate the credit union difference. The continued presence of a viable credit union choice is necessary to keep down and reasonable the costs of consumer and small business banking, and to assure the presence of a nonprofit commitment.