What is a Credit Union? Young People Don’t Know.

November 26, 2012
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Next week Andera is hosting a webinar with Tim McAlpine, the man behind the Young and Free credit union youth marketing movement, and that has given me enough of an excuse to spend some time browsing the hundreds of videos created by the Young and Free “spokesters.”

My favorite is a  video by Deandre Upshaw, the former Young & Free spokester of Texas. Deandre went around Baylor University and asked students “Do You Know What A Credit Union Is?”  He got these faces:

When people my age (I’m a Gen Yer) ask me what I do and I reply “I work for a company that makes software for banks and credit unions,” I get similar faces, or blank stares.  I thought it was because my job sounded terribly boring, until I realized that most of them where still trying to process the statement. “Banks” they understood, but “credit unions”…? Not entirely.

What’s in a Name?

Juliet said, “That which we call a rose / would by any other name smell as sweet.” She was right,  names can’t change the nature of a thing.  But they can change how we understand it.

“Credit Union” was chosen at the turn of the century, during the heyday of organized labor.  At the time, it was probably an excellent choice. “Credit,” in common understanding, meant banking, and “union” evoked the cooperative spirit of organized labor and ideals of fairness and equality.

But times have changed, and words no longer mean what they used to.  “Credit” was complicated by the introduction of the credit card, and now the consumer accustomed to hearing “debit or credit” must think for a moment before abstracting the term to banking at large.  At least since the 1970s, “union” has been a controversial term, its connotation conflicted between criticism of teachers’ unions and teamsters and older ideals of cooperation.  For young people especially, these words strung together don’t make much sense.

Over the last few years several credit unions have dropped “credit union” from their name, sparking opinion pieces in support, notably from Sarah Snell Cooke, the editor of the CU Times, and opinion pieces against, notably from Tim McAlpine, the same whose program created the video I referenced above. Both have sides have a point. It’s true that while “credit union” doesn’t carry currency for everyone, it does for some, and as a package the term has come to mean something greater than the sum of its parts.

Language They Understand

I think the debate is a little misdirected. It’s not about the name, it’s about getting young people to understand what a credit union is.  Credit Unions need to use comprehensible language to explain their model to young people if they keep the name or not.  They also need to use more comprehensible language to explain their products; Laurie McLachlan wrote a post to this point a few months ago on The Andera Blog called  “Stop Selling Membership, Sell What Matters.”

Explaining “credit union” with language that young people understand doesn’t mean explaining banking in baby talk. The words are there, credit unions just need to decide which ones to use.

  • “Non-profit” is one.  Legally, most credit unions are non-profits.  I am 100% certain that sometime, somewhere, some young person involved with the Occupy movement said “Hey, wouldn’t it be great if we started a non-profit bank?” I’m equally sure that an older, wiser co-protester quickly corrected him or her, but the point stands that for young people “non-profit” is a much more intuitive, widely understood term than “credit union.”
  • “Cooperative” or “Co-op” is another, an older word that that has re-entered the youth vernacular via cooperative college housing and the local food movement.
  • Social Enterprise” is another, a word with possibly more potential but probably more pitfalls than the other two. A social enterprise is most commonly defined as an organization that mixes for-profit or market methods with a non-profit or mission mentality, and credit unions definitely fit the bill. Social Entrepreneurship as a concept is incredibly popular among college students, but it’s still not entirely defined and many consumers, especially older consumers, don’t recognize it. The last thing a Credit Union wants to do is alienate one demographic group while trying to reach another.

Again, it’s not about changing the name.  ”Credit union” references a long and rich history, one that shouldn’t be forgotten.  But to get to youth, credit unions need to explain the concept with language youth understand. Get them in the door, and they will learn to appreciate “credit union” for what it is. But you need to get them in the door first.

Original Post: blog.andera.com

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One Response to What is a Credit Union? Young People Don’t Know.

  1. Jim Wells on November 26, 2012 at 3:59 pm

    I remember starting a discussion like this in a credit union group on LinkedIn about a year ago. I was trying to get credit union folks to understand the very real impediment they place in front of prospective members who don’t know what they are or what they are. I posited that if consumers aren’t looking for credit and don’t belong to a union, why would they walk into a credit union? The problem is exacerbated by the movement’s well-known dearth of marketing, and arcane regulations about who can and cannot be a member. I see people’s eyes glaze over when I try to explain credit unions to them. Doubtful that young adults, raised on MTV and video games, will invest the time and energy to figure out what these institutions are all about. If banks keep escalating the costs their services, young adults may be unlikely to establish formal relationships with any insured depository institutions.

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