The New Zealand Association of Credit Unions (NZACU) says new research it commissioned shows credit unions have a greater focus on their customers' needs than banks.
NZACU chief executive Henry Lynch says the research by Brandmanagement Group places New Zealand credit unions "well above" banks in terms of the overall experience when people are looking to become a customer.
The research, undertaken through a mystery shopper format with the ‘customer’ asking to set up a new savings account with the bank or credit union and recording their experience of the process, compared New Zealand credit unions with their Australian credit union counterparts as well as New Zealand banks. Lynch says areas compared include disclosure of repayments, what the customers' sales experience was like, quality of information, expertise and professionalism, general staff impressions, and initial contact.
The average Australian credit union scored around 5, New Zealand banks 5.5 and the average NZACU member 6 out of a possible score of 10. A total of 32 mystery shoppers were used in New Zealand, with a Brandmanagement Group affiliate also surveying Australian credit unions across the Tasman.
"We are obviously very proud of that," Lynch says. "As Brandmanagement suggested in their presentation to us, New Zealand Credit Unions should be doing the ‘financial services haka’ right now."
Local credit unions rated significantly ahead of banks in the areas of keenness of staff, professionalism and disclosure of fees, he added.
The NZACU has 21 credit union members, the bulk of the country's credit unions, which in turn have about 177,000 members/customers. Lynch says as credit unions are fully owned by, and exist solely for, their member-customers, they don’t have the pressure to maximise profits for external shareholders. NZACU members include Aotearoa Credit Union, Fisher & Paykel Credit Union, Credit Union Baywide, New Zealand Firefighters' Credit Union, Credit Union Auckland and Alliance Group Credit Union.
Common bond and tax free
An individual credit union's members all must have what's known as a common bond. For example, this could mean that they all work for the same company or live within the same region. Credit unions have a favourable tax status in that income derived by credit unions, except for that derived from a business carried on beyond the circle of membership, is exempt from taxation.
The NZACU says its members have more than NZ$490 million in savings accounts, assets of NZ$625 million, capital of NZ$109 million and a BB speculative grade credit rating from Standard & Poor's. The credit rating, two rungs below S&P's lowest investment grade rating of BBB-, suggests an orgainsation faces "major ongoing uncertainties to adverse business, financial and economic conditions." The NZACU also has its own member owned and operated insurance company - Credit Union Insurance Ltd.
New members welcome
The NZACU is keen to attract new members whilst retaining its fundamentals of looking after the member-customers in key areas such as thrift and bolstering their financial literacy, says Lynch. See more here on who credit union members are and the Registrar of Friendly Societies and Credit Unions last annual report here.
Lynch says his message to customers, or potential customers, is: "You own the organisation that you belong to - the credit union. So in some form or other the value goes back to you in reduced fees, your local community, sponsorship, better rates because you own it and it (profit) doesn't go offshore to Australian banks."
"We discuss that we only have four worries in our life - yourself, your family, your health and your finance. And credit unions are really good with helping people with their financial worries," Lynch added.
“Credit unions are very popular in Australia, the UK and US in particular, but are still largely unfamiliar territory to a lot of New Zealanders."
"Having said that, word is getting out that anyone can be a credit union member and they’re a great option for anyone who is looking for truly personal, friendly service. There are no joining fees and plenty of benefits for Kiwis to shift their everyday banking needs to a locally owned organisation that genuinely has their best interests at heart."