Many readers may cite Bank Transfer Day as the biggest catalyst for the move to credit unions, but a new study shows that more money was making its way toward not-for-profit institutions long before last fall.
In a report released this week, SNL Financial examined deposit growth at banks and credit unions since 2006, and the results show that credit unions began seeing an initial surge in the percentage of deposit growth in early 2009. What's the significance of that time period? The report cites two major events that shook the banking industry near the end of 2008: the failure of Washington Mutual and the Wells Fargo acquisition of Wachovia.
I've drawn lines to rising fees and sub-par customer service as the key drivers for breaking up with the banking industry, which has certainly helped fuel frustrations with banks. However, the data from SNL Financial show that consumers may be just as concerned with an equally crucial component: confidence. As the financial crisis gripped the country and bank failures mounted, it's no surprise that plenty of consumers considered becoming members instead of account holders.
However, don't let the percentage-based results make you believe that credit unions actually have more deposits than banks. Not-for-profit institutions have been enjoying a steady climb in deposit growth, but a comparison of the three biggest banks and credit unions shows that the banking industry is still the undisputed King of Cash. JPMorgan Chase, Bank of America and Wells Fargo have a combined total of more than $3 trillion in deposits. The total at Navy Federal Credit Union, State Employees Federal Credit Union and Pentagon Federal Credit Union? A meager $70 billion.
What do you think of the results? Were you weighing your options between banks and credit unions before the official Bank Transfer movement started gaining momentum?