How Credit Unions Can Use the Wallet Allocation Rule

WHAT CREDIT UNIONS CAN LEARN FROM THE WALLET ALLOCATION RULE Filene Research Institute Credit unions have the power to increase their business by focusing on what drives member choice instead of what drives members' satisfaction levels. By following the Wallet Allocation Rule, credit unions can discover where their institution ranks in the eyes of their members. Financial institutions can then determine why members are ranking them that way, which will lead to smarter decisions and more deposits. The three-step process is called * The Wallet Allocation Rule * and was proven effective for credit unions by researchers at the Filene Research Institute. The rule considers: 1st Rank: whether your credit Mix: The number of other union is a member's first choice financial institutions the member uses Combining those two values allows credit unions to predict a member's share of deposits: 1. 3 XYZ 1234 Establish the number Obtain satisfaction scores Plug the rank and the number of of institutions that depositors for each brand used brands used by the member into use for all banking needs and convert into ranks the Wallet Allocation Rule formula . 2 RANK 2 (I- -- X - Number of brands+| Number of brands Dr. Lerzan Aksoy, co-creator of the Wallet Allocation Rule and a marketing professor at Fordham University, conducted the Filene credit union study in which... Leading to 4,712 8,799 credit union depositors were surveyed financial institution evaluations By determining where your credit union ranks based on its share of deposits, credit unions can begin to look more closely at what factors drive depositors to use more than one financial institution.The colored bars below show which factors drive first choice selection at smaller and larger credit unions: 10.0% 8.0% 6.0% 4.0% 2.0% 0% 0% 2.0% 4.0% 6.0% 8.0% 10.0% In-branch service 1 1) Fee competitiveness Resolution of complaints Internet banking 2 Products offered 3 Financial advice quality % Deposit interest Branches First Choice First Choice Satisfaction Satisfaction Drivers of First Choice vs. Drivers of First Choice vs. Drive-thru service Drivers of Satisfaction for Drivers of Satisfaction for Smaller Credit Unions Larger Credit Unions (>$1.5 billion in assets) (<$1.5 billion in assets) .---. ATM network 10.0% 8.0% 6.0% 4.0% 2.0% 0% 0% 2.0% 4.0% 6.0% 8.0% 10.0% These factors help consumers determine which institutions they use for deposits. Understanding them shows credit unions how to meet the needs of their members, making it unnecessary (or at least less compelling) for them to deposit elsewhere. Products Retail banks In-branch service Fee Competitivness Deposit Interest Branches Smaller credit unions Larger credit unions Drive-Thru service ATM network Financial advice quality Internet banking Products offered Money center banks Service The four sides of the map-service, financial competitiveness, coverage, and products-indicate the overarching dimensions by which all financial institutions are categorized in the credit union members' minds. Conclusion The Wallet Allocation Rule will help credit unions link member satisfaction to the number of deposits members actually make in a financial institution. By using this rule, credit unions get to know their members on a personal level and understand what actually drives their behavior. For more about the Wallet Allocation Rule and credit unions, visit filene.org Coverage INI 3 Financial competitiveness WHAT CREDIT UNIONS CAN LEARN FROM THE WALLET ALLOCATION RULE Filene Research Institute Credit unions have the power to increase their business by focusing on what drives member choice instead of what drives members' satisfaction levels. By following the Wallet Allocation Rule, credit unions can discover where their institution ranks in the eyes of their members. Financial institutions can then determine why members are ranking them that way, which will lead to smarter decisions and more deposits. The three-step process is called * The Wallet Allocation Rule * and was proven effective for credit unions by researchers at the Filene Research Institute. The rule considers: 1st Rank: whether your credit Mix: The number of other union is a member's first choice financial institutions the member uses Combining those two values allows credit unions to predict a member's share of deposits: 1. 3 XYZ 1234 Establish the number Obtain satisfaction scores Plug the rank and the number of of institutions that depositors for each brand used brands used by the member into use for all banking needs and convert into ranks the Wallet Allocation Rule formula . 2 RANK 2 (I- -- X - Number of brands+| Number of brands Dr. Lerzan Aksoy, co-creator of the Wallet Allocation Rule and a marketing professor at Fordham University, conducted the Filene credit union study in which... Leading to 4,712 8,799 credit union depositors were surveyed financial institution evaluations By determining where your credit union ranks based on its share of deposits, credit unions can begin to look more closely at what factors drive depositors to use more than one financial institution.The colored bars below show which factors drive first choice selection at smaller and larger credit unions: 10.0% 8.0% 6.0% 4.0% 2.0% 0% 0% 2.0% 4.0% 6.0% 8.0% 10.0% In-branch service 1 1) Fee competitiveness Resolution of complaints Internet banking 2 Products offered 3 Financial advice quality % Deposit interest Branches First Choice First Choice Satisfaction Satisfaction Drivers of First Choice vs. Drivers of First Choice vs. Drive-thru service Drivers of Satisfaction for Drivers of Satisfaction for Smaller Credit Unions Larger Credit Unions (>$1.5 billion in assets) (<$1.5 billion in assets) .---. ATM network 10.0% 8.0% 6.0% 4.0% 2.0% 0% 0% 2.0% 4.0% 6.0% 8.0% 10.0% These factors help consumers determine which institutions they use for deposits. Understanding them shows credit unions how to meet the needs of their members, making it unnecessary (or at least less compelling) for them to deposit elsewhere. Products Retail banks In-branch service Fee Competitivness Deposit Interest Branches Smaller credit unions Larger credit unions Drive-Thru service ATM network Financial advice quality Internet banking Products offered Money center banks Service The four sides of the map-service, financial competitiveness, coverage, and products-indicate the overarching dimensions by which all financial institutions are categorized in the credit union members' minds. Conclusion The Wallet Allocation Rule will help credit unions link member satisfaction to the number of deposits members actually make in a financial institution. By using this rule, credit unions get to know their members on a personal level and understand what actually drives their behavior. For more about the Wallet Allocation Rule and credit unions, visit filene.org Coverage INI 3 Financial competitiveness