Credit Union Mergers: Don’t Undervalue New Member Onboarding

Mergers have become a common occurrence in the credit union industry. From 2010 to 2023, there were 2,822 such transactions. While there can be a variety of motivations for mergers, NCUA filings from 2017-2021 show that 76% cited “expand service offerings” as the primary reason. This often means that the merger intended to increase scale so that more products and services could be offered to more members. Yet even though serving their members' needs is a high priority, credit union decision-makers often miss the opportunity a merger presents to deepen loyalty among new and existing members.

Merger Game Plan

A merger is a significant undertaking that includes many steps. Here is a high-level overview:

1. Answering the question: Why merge? – If a credit union is in financial trouble, it may want (or be forced by NCUA) to find a merger partner to survive. Conversely, a successful credit union may be seeking growth opportunities.
2. Looking within and without – Conduct a thorough SWOT-type analysis of internal strengths and weaknesses as well as significant external factors. The completed document allows management and the board to realistically understand the organization’s risks as it enters the merger process.
3. Identifying a partner—The partner search criteria will include quantitative and qualitative attributes. Quantitative factors include primarily financial and market aspects. Qualitative issues include synergies or disconnects between branding, product mix, company culture, member demographics, geography, and technology stacks.
4. Negotiating the contract—The  two parties first conduct due diligence on each other. Once both parties agree to continue, negotiation proceeds on a long list of details on combining, including financials, charter type, branch and ATM network integration, board and committee official appointments, a staffing plan, and technology integration.
5. Finalizing the transaction—The plan is submitted for regulatory approval after striking an agreement.
6. Executing the merger plan—Once the regulatory green light is given, the merger is usually set before the members of both credit unions for a vote. Once approved, implementation commences.

This example is just one of many well-known versions of the merger process in the credit union community. Yet, among published information about executing a merger, it’s surprising to see how little is said about how members are treated during the process.

Remember the Members

Members figure into the typical merger plan in three ways:

1. Understanding the members of both credit unions and how they compare – Members on each side are evaluated in terms of demographics, the mix of products they hold, how much they hold in each account, and their activity frequency. This analysis provides information to guide the many areas that must be integrated to form the combined credit union.
2.  Persuading members to vote for the merger – A membership vote is usually required for the merger to go through. A plan is created to communicate the risks and benefits of the merger. Of course, management will be inclined to accentuate the positive to convince members to vote “yes.”
3.  Onboarding the “new” members from the merger partner—Members of the merger partner undergo a significant change in their credit union experience. At the very least, they must adapt to an unfamiliar brand. Other aspects–like communications, customer service, and technologies to access and manage their accounts–are changing. A shaky transition may motivate some of these members to close their accounts rather than deal with the perceived hassle.

This last factor regarding onboarding often receives less than adequate treatment in the integration plan. With so many tasks to complete during a merger, it is tempting to fulfill the basics of onboarding merged members and go no further. Yet, the membership evaluation done in the early stages of the process likely identified opportunities to proactively encourage new members to increase their business with the combined credit union.

Seizing the Merger Moment

A merger gets the attention of members from both involved credit unions in a way few events can. Existing members wonder what changes might be in store for them. However, these folks are less likely to experience much disruption in their banking life compared to the merger partner’s constituents. The latter group might be concerned about potential mistakes when their accounts are transferred and are rattled by unfamiliar technology and other processes for their day-to-day finances. At a minimum, credit unions need to beef up (at least temporarily) their customer service and communications capacity to handle a surge in questions from incoming members.

However, with this heightened attention also comes opportunities to not simply onboard new members but to “wow” them with the great new options their new credit union offers. For example, offering all members special merger rates on loans or CDs might help turn new member trepidation into excitement about being a part of the combined enterprise. (Existing members will probably think the merger is a pretty sweet deal for them, too.)

Welcome to the Family with Niche Experiences

Another way to seize the merger moment is to leverage innovative technologies like Niche Experiences to make new members feel even better about their new “family.”

Niche Experiences leverages personalization technologies to group members into sub-segments or niches for targeted communications to build exceptional engagement and loyalty. Each niche receives digital content tailored to its interests and life priorities. However, content is not focused only on financial topics. Depending on the niche's preferences, most will be “lifestyle” topics like food, travel, health/fitness, and fashion/beauty.

While it may seem counterintuitive for a credit union to provide such general content, it is intended to appeal to the broad scope of members’ interests. This, in turn, aims to create a sense that the credit union understands them as people, not just depositors or borrowers. Consequently, the term Niche Experiences means members are engaged at a deeper, more profound level.

Of course, Niche Experiences seek to increase loyalty and, therefore, wallet share among existing members. However, introducing Niche Experiences to new members through a merger is a way to exceed their expectations and cement their ongoing impression that merging into the new entity was a massive boost to their financial well-being.

Transitioning newly acquired members to embrace a new brand can pose significant challenges. However, with Nook’s emphasis on lifestyle content, there’s a unique opportunity to foster brand recognition and, more importantly, cultivate meaningful relationships with these new members.

By delivering frequent and consistent communication tailored to add genuine value rather than simply pushing products, Nook can help establish the acquiring credit union as a trusted ally in their new members’ financial journeys. This approach ensures a smoother transition and lays a strong foundation for long-term loyalty and engagement.