Big Banks vs. Credit Unions: Who Wins?
On the other hand, Big Banks have many opportunities to grab customers’ attention because they have built up significant brand awareness with national advertising and branch presence. One way big banks appeal to their customers is by having more available branches and ATMs compared to credit unions which is convenient for customers that prefer to manage finances in person.
Even though credit unions are at the disadvantage of having smaller branch networks, having a physical location to manage finances is becoming less needed as digital banking capabilities continue to grow. According to
research done on the future of bank branches, current trends suggest that all bank branches could be closed by 2034. It was also found that branch closures have been doubling every three years, therefore the branch advantage big banks claim today will lessen over time.
The Power of Technology
As branch numbers have diminished and digitally-native generations become more prevalent, the importance of a digital-first banking strategy has increased significantly. With the advancements in technology for the financial industry, Fintechs have disrupted the financial services market to become legitimate competitors to financial institutions.
In order to compete, traditional financial institutions need to innovate and offer both the capabilities offered in a branch and the new services offered by Fintechs, such as P2P payments or automated investments. In this environment, Big Banks often focus on larger commercial clients and neglect the capabilities that individuals look for in their digital banking experience.
Futher, fully-digital banking solutions can experience some pushback from consumers because there are some people that still prefer going into a branch to handle their banking needs, while some people are intimidated or confused about some functionalities of banking technology.
Who wins?
After comparing two competing financial institutions, it’s the credit unions that deliver a better banking experience. When credit unions combine cutting-edge technology with high-quality member service, they become a better option for consumers, which gives credit unions a competitive advantage against large banks.
A credit union’s smaller membership base allows them to hear the needs of each individual, crafting solutions that cater to their membership, meanwhile big banks tend to have a more generalized, generic approach to the features that they offer. Credit unions have the upper hand on innovation and relationship banking which gives their members a secure and easy banking experience.
Chris Doner is founder and CEO of Access Softek, a digital banking platform provider.-->
When it comes to banking, there are two main types of financial institutions- big banks and credit unions. Big banks are national and regional-based for-profit institutions that provide profits to their shareholders while credit unions are local and community-based institutions that function through the support of their members. Both offer similar products and services but there are several benefits to choosing a credit union over a big bank.
How They Compete
Credit unions typically have much lower fees than big banks because they...
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