A while back, a coworker of mine wrote an article discussing the differences between credit unions and banks, and which is better. Well, I may be a little biased with my opinion since I have been in the credit union business for almost a quarter of a century, but this topic got me thinking—specifically, about the terminology differences between the two.

Credit unions are different from banks (we know this, of course), but some of those differences can create confusion, particularly when it comes to how we label and sell our products, and this confusion may be turning people off to the credit union.

So, is it truly the credit union versus bank argument we need to be focusing on to get those members in the door? Or could it simply be that the potential members “don’t know what they don’t know?” Are credit unions using terminology in their marketing that may be scaring potential members away?

Non-members don’t understand the lingo

Let’s think about this. If I were to go out on the street and ask a handful of people what the difference is between a bank and a credit union, how many would be able to give the laundry list of answers? As a matter of fact, how many people would know even one answer? Very few, I’d bet, given that the Financial Brand says only 29% of millennial non-members know what a credit union is.

Now that I have you thinking about this, let’s stick with that same group of people, and if I asked them what a share draft was, do you think any of them would know the answer? I am guessing they probably wouldn’t, but maybe they would know what a checking account was. In fact, one of my younger coworkers couldn’t tell me what a share draft was as I was writing this article.

I think it is safe to say that credit union terminology, or even banking terminology, is, how do you say…ancient? Those words like high-yield, interest, dividends, share drafts (there it is again), annuity, asset, basis points, periodic statement, to name a few, could be the reason those people aren’t applying for memberships. They need a checking account and probably don’t understand that a share draft account is one. Confusion, confusion, confusion.

Erase the confusion

The good news is that this is an easy problem to fix!

When sitting down to write a business strategy, update a fee schedule, or review credit union policies, you may want to take into consideration how these are going to be presented to your members or to potential members. What terminology is being used, and what could or couldn’t be confusing to your members?

Start with the basics. When updating disclosures, make sure they are clear to your members; make sure the documentation is clear. Use terms like APY (Annual Percentage Yield), APR (Annual Percentage Rate), Overdraft Protection instead of Courtesy Pay, and Service Charge over Maintenance fee.

Additionally, another common word that trips non-members up is shares, which refers to what most people know as a savings account. Credit unions use the word “shares” over savings because our members are technically our shareholders; their accounts represent their shares in the credit union. In that same vein, checking accounts are called share draft accounts instead.

Our industry chose these phrases because they define our difference, but in practice, they do little more than confuse potential members into trying to figure out what these names mean and how similar they are to what they do know. Of course, we want to make sure the members understand why they are choosing a credit union, but we should be presenting that difference in our service and mission, not by labeling our accounts differently.

Time to update

I’m not suggesting credit unions change everything about them that makes them different, but when it comes to marketing ourselves, being widely understood is incredibly important. Studies show time and time again that non-members struggle to know what credit unions are and what they offer.

Using confusing and outdated terminology won’t solve that problem, and keeping it doesn’t help anyone. Instead, help them understand by meeting them where they’re at with the lingo they know. In this way, we can more clearly present ourselves as an alternative to the big banks in a way that’s understood by the many.

We’ve updated a lot of credit union processes over the decades; it’s time for our terminology to get a refresh too!