By Michele Lerner
Originally published March 2007

David Bunch Jr., president and CEO of FedChoice Federal Credit Union in Lanham. Photo by Lisa Helfert

     “We want to be competitive with banks,” said Bunch, who is president and CEO of Lanham-based FedChoice. “[We want to be] known as the ‘un-bank’ — a better bank if you are a federal employee.”
     Unlike banks, credit unions are nonprofit organizations which are not taxed and do not have to pass on profits to shareholders. Credit union members function as shareholders with profits returned to them in the form of higher savings rates, lower loan rates and fewer fees than banks, according to industry officials.
     The Baltimore-Washington Corridor is home to 57 credit unions, with more than 1.1 million members, according to the Maryland and District of Columbia Credit Union Association.
     Credit unions face a Samson and Goliath battle to attract the attention of consumers in a country dominated by banks with branches seemingly on every corner. 
     “Credit unions began as a financial institution meant to serve people of modest means, but now there is a new breed of credit unions which are larger and offer full financial services to their customers,” said John Hall, a spokesman for the American Bankers Association (ABA). “The ABA questions the fairness of these credit unions receiving special treatment such as not being subject to taxes or to the same regulatory treatment as banks.”
     Nationally, all credit unions combined have $800 billion in assets, but some banks easily exceed that in just one company, says Mike Beall, CEO of the local credit union association. Combined assets for credit unions in Maryland and Washington, D.C. are approximately $20 billion. 
     “Rebranding with a fresh look, streamlined messaging and frequency and depth in marketing can attract customers to credit unions,” said Paul Lucas, a Washington, D.C.-based branding consultant who works with credit unions nationwide.
     “Without taxes or stockholder pressure, credit unions could ignore market pressure and were not required to grow,” said Lucas. “Competition from Internet banks such as ING Direct and increasing numbers of banks has put pressure on credit unions to increase their membership.”
     FedChoice added 1,000 new members between September and December 2006 — giving the company about 23,000 members and $220 million in assets. 
     FedChoice’s rebranding effort, developed by Crosby Marketing Communications in Annapolis, started with extensive research among members, the board of directors and federal agencies to determine how to differentiate itself from banks and reinforce the impression that the members are owners. 
     “Our research showed that most people have some familiarity with credit unions but, if they are not a member of one, they have no depth of understanding of how credit unions work,” said Raymond Crosby, president of Crosby Marketing. “People do see a clear distinction, though, that banks are for profit and credit unions are for members.”
     FedChoice and Crosby Marketing started a guerilla marketing campaign in September 2006, which included hitting the streets at key Metro stations and intersections near civilian federal offices in downtown Washington, D.C., handing out materials and giveaways. Radio ads and an online component with emails directed to federal employees were also part of the marketing strategy. 
     “The new name is part of a quantum leap forward for FedChoice, but it’s really just the tip of the iceberg in terms of the rebranding effort,” said Crosby.
     In addition to renaming the credit union and creating a new logo, FedChoice built a new headquarters in Lanham and started an online membership application, allowing new customers to open accounts online — making internet banking a priority for its members. 
     The “e-branch” is a trend for many credit unions, which find it difficult to compete with the number of bank branches. 
     At Atlantic Financial Federal Credit Union, Ellie Meyd, lending/marketing vice president, said, “Our philosophy is that you don’t need lots of brick and mortar to provide good services. Brick and mortar is expensive, so instead, we provide better electronic services through the Internet, phone and ATMs.”
     Atlantic Financial has just under 12,000 members and $60 million in assets. Its original charter was for phone company employees in Baltimore and today they have members from over 100 companies.
     Bunch said part of the marketing strategy is to educate consumers on credit unions’ array of financial services that are equal to banks, including credit cards, mortgages, consumer loans, savings and checking accounts, IRAs and CDs. 
   SECU Credit Union, which offers services to state employees in Maryland along with community college students and other member companies, plans to start a marketing effort this year focusing on the fact that credit unions have always been closer to their customers than banks, according to Sharon Sykes, vice president of marketing for SECU, one of the largest local credit unions.
     SECU started in 1951 with seven members, each with $5 to deposit. Now the credit union has $1.6 billion in assets and 240,000 members.
     Credit unions are controlled by a volunteer board of directors made up of members. According to Beall, there are 180 credit unions headquartered in Maryland and Washington, D.C., with 2,500 volunteers serving on their boards.
     “Credit unions offer the chance for an everyday person to work for their own financial institution,” said Sykes. “Any member can call and speak to our CEO. How many people can call up the CEO of Bank of America and speak to him?”  <

     Michele Lerner is a contributing writer in Washington, D.C.