With Fees Scrutinized, Where CUs Have Advantage

By Ray Birch

LAKE FOREST, Ill.—In a period in which the CFPB, consumer groups and much of Washington are focused on financial institution fees, a new study reveals credit unions are well ahead of banks when it comes to website transparency of their pricing and policies.

A new study from Moebs $ervices has found credit unions are more transparent with their pricing, especially online. One of the reasons for the disparity, the study reveals, is banks want consumers to stop in their offices for the OD price.

The analysis gives credit unions a 92.6% rating, and banks 56.8% on their OD transparency. That means of those credit unions surveyed in the report—which polled 3,600 FIs—92.6% of CUs are very clear on their OD pricing via their websites, while only 56.8% of banks do the same.

As CUToday.info recently reported, NCUA has announced plans to expand its scrutiny of OD pricing pricing and policies posted on credit union websites. California’s state attorney general has made a similar announcement, as has the CFPB.

Michael Moebs

The key to the difference between bank and CU overdraft transparency is cross-selling, according to Michael Moebs, economist and chair of Moebs $ervices.

“Banks have always had higher cross-sell ratios than CUs,” Moebs explained. “Banks cross sell other financial services two-to-one over CUs. To counter, CUs have always tried to pay higher on deposit interest and charge less on loans and fee services. Credit unions will be more price transparent to offset the bank front-line sales advantage.”

The Revealing Element

Moebs said the “revealing element” of website features is the overdraft limit.

“Half of CUs state on their websites what the limit is. While banks are half of this—and their cousin, the thrifts, are 75% of the banks,” Moebs added. “The other piece of the selling puzzle is banks want new customers to visit the branch to learn prices for services, while CUs will happily tell you the price on their website, online chat, or phone. The final piece is relationships. Banks want the whole relationship while CUs know the buyer is an owner in their cooperative structure. So, CUs are transaction oriented.”

The Moebs study also shows FIs, overall, are “finally catching up to the rest of the world” and making their websites more user-friendly and transparent, said Elizabeth Hamlin, financial analyst at Moebs $ervices.

“Credit unions lead the pack when it comes to disclosing fees, rates and balances for consumer services, such as checking accounts and CDs, followed by banks and then thrifts,” she said. “This basic pricing info is expected from consumers shopping financial services online,” she said.

The ’Big Push’

Hamlin said in recent years banks and especially thrifts have been “wary” of giving any information away on their websites.

“The big push is to see their consumers face-to-face. Their ploy is to have consumers come into the branches—better to be sure these folks are truly interested in their services so as to not waste their time,” Hamlin explained.

Hamlin contended that depositories sell services, but “their websites tell a different story. Look anywhere on an FI’s website and what do you see? Products being sold. This approach is backwards. FIs sell services, not products,” she said (see table at right).

Additional Findings

The study also found:

• Credit unions lead in disclosing services on their websites. “In every category, CUs are the clear winner—the one to beat,” Hamlin said
• 64.6% of the services surveyed are disclosed on all FI websites—over one-third of services are not revealing prices at all
• Collectively for all four services—DDA, ODs, OD Limits and CD rates—CUs display “30.1% more data” than banks and “17.6% more” than thrifts
• Depositories conceal OD limits. Collectively, only 35% of FIs show their limits online. Checking (DDA), followed by OD fees and CD rates are much more readily available on websites than OD limits

The Good News

Elizabeth Hamlin

“The good news is from our last annual statistical survey in January of 2023, FIs as a whole, are trending towards more consumer-conscious websites by displaying more fees, rates, balances, and services right on the website,” Hamlin told CUToday.info. “And as a bigger bonus, there are more chat functions to help get a live representative.”

Starting With a Chatbot

The data show many depositories initiate online communications with a chatbot.

“One can easily speak to a live representative in minutes,” Hamlin said. “People can get their answers efficiently, and it reduces the need to go into a branch. This allows the representative to sell in the chat using the website as a sales tool.”

Moebs reiterated that “price is the service, and the service is price” in all financial services.

“Depositories sell services, not products,” Moebs said. “The marketing and selling of each is quite different. More than 35% of all financial institutions do not display price info on websites. The day has ended when people stop by the branch for a free cup of coffee and to price shop. If it is not on the website, then Gen Zs and Millennials won’t even give the FI a second look. They move on.”

More Efficient Websites

Moebs contended FIs can gain more business using their websites more efficiently.

“It is a disservice to hide the information or force consumers to visit a branch. Not only can a depository be viewed as more user-friendly, but also avoid potential legal issues by disclosing information on the website correctly to consumers,” he said. “Update those websites, or risk being bitten by the compliance crocodile.”