A smooth CU merger depends on member buy-in

If you have been part of the credit union world for any length of time, you know there have been a lot of mergers, even while greatly increasing membership and offering expanded benefits. And it looks like those merger trends will continue.

Over the years, we’ve had the honor of helping several credit unions navigate these mergers. And we’ve learned that member communication is the one consistent factor that makes all the difference in ensuring a smooth, positive, and painless CU merger process.

Of course, there are lots of legal, regulatory, financial, technical, cultural, brand, and operational tasks to manage as well. But even if everything else is handled perfectly, it doesn’t mean much if the members of both credit unions aren’t on board throughout. It’s vitally important to keep them in the loop.

Members need to know exactly what you are doing (and what you’re NOT doing), why, and what to expect. And there are several common questions and worries you’ll need to address head on.

Start communicating early and often

Merger discussions have to be confidential up to a point. But once you’ve passed that point, you have to flip over into a marketing mindset, and make sure EVERYONE knows what’s happening.

Keep the messages positive, simple and repetitive, with all the background info easily available on both websites.

And it’s important to do this early; one month ahead of the merger date will feel too sudden, and even three months might feel rushed.

Need a member vote? Communicate first and make it easy.

If your merger requires membership approval or a vote, make sure you don’t spring it on them with no warning. Start marketing the reasons, benefits, and effects of the merger early so that by the time members weigh in, they’ll be on board.

Regulations and bylaws vary, of course, but make the vote as easy as possible. Handle it online if you can, or by mail if paper is required.

Tell your members why.

There are many different reasons a merger might make sense. Share these openly and honestly with your members. Tell them the benefits without hype, and if there are potential downsides, address them clearly.

Make sure the benefits to individual members are very clear, and it’s clear that member benefits are the primary drivers of a merger.

Remember, people are accustomed to mergers or buyouts that are nothing but bad news for them. Mergers of for-profit companies are usually done solely to increase profits or generate a large payoff, and often have negative impacts on individual customers. You’ll have to explain how and why your merger is different.

Tell your members how.

You’ll also want to be clear that you are following a smooth and thorough process. Again, many people have had negative experiences with other types of mergers.

Explain clearly and early how they’ll be impacted and what (if anything) they’ll need to do or change, and when. For example, if online banking logins will change, make sure the process is as painless as possible and explained clearly well ahead of time.

Address FAQs and fears right up front, even the silly stuff.

We’ve found that credit union members have several fairly consistent fears and questions. Make sure answers are out front and easily available on your website, newsletters, statements, etc.

Some of these may seem a little silly, but remember, most people aren’t CU experts like you. You’ll need to carefully explain how credit union mergers are different than other types of mergers. It really is about them, not just slashing costs, CEO bonuses, or boosting profits.

And if there’s any bad news like a branch closing or changing account numbers, explain it thoroughly and clearly, and how you’re managing the impact.

Common member questions and concerns include:

  • Is the larger CU buying the smaller one?
  • Is this going to be a combined CU with a new name?
  • Are you turning into a bank?
  • Is the CU in trouble or going bankrupt?
  • Is my money safe? Is my mortgage going to be sold?
  • Is the CU going out of business? Selling out? Turning into a bank?
  • Am I going to need new checks or new cards?
  • Is this going to cost me anything? Will fees increase?
  • Will everything keep working?
  • Will my account get shut down?
  • What will happen to my loan/credit card/ mortgage, etc. ?
  • Will my account number change?
  • Are online banking, the app, phone numbers, routing numbers, etc. changing?
  • Are you closing any branches? What about my favorite branch?
  • What about the staff? Are you going to lay off anyone? Is my favorite teller going to be OK?
  • Are the Board or CEO are getting big payouts?
  • Who’s going to be in charge of the CU? What’s happening to the CEO, board, management, etc.?
  • What if there’s a problem with my account after the merger?
  • Are you going to shut down for a while?
  • What’s going to happen to the name or heritage of my CU?
  • Is everything going to get more impersonal and corporate? Are you going to start acting “bigger”?

Don’t forget your internal audiences.

Before the merger goes public, employees and volunteers need to be up to speed and on board. They’re going to have many of the same questions and concerns as the members, and they will need all the info and a consistent source of fast answers as they field member questions.

As early as possible, open all the lines of communication and make sure every employee and volunteer has the opportunity to ask questions and get information in every possible way, even anonymously. Make sure everyone has time to absorb the news and deal with their own concerns before they’re in front of members.

And pay attention to how a merger will affect your employee’s lives. For example, year-end is a common merger completion date; how will that affect holidays and vacations? Will they need to get a babysitter for extra training sessions in the new systems? Will jobs or pay change?

Plan for culture and brand changes.

There are many types of credit union mergers. At one end of the spectrum, if a very small credit union merges into a very large one, there’s often not much left of the old credit union afterwards.

With a “merger of equals” quite often the new credit union is a blend; the name and visual branding may change, the core of their brand and purpose blends, and there’s a lot of work internally to synchronize the two cultures. It’s a bit like the Brady Bunch, where two “families” have to learn to work together.

Most CU mergers are somewhere in the middle, with a smaller CU merging into a somewhat larger one, but not really disappearing.

The point is, you have to deliberately decide on, plan for, and work towards the best brand and internal culture results. You can’t just wait and see what happens; credit unions all have a lot in common, but they can be very different under the skin.

A successful, smooth CU merger depends on member, volunteer, and staff buy-in. A strong communication plan will help ensure that the new “blended” credit union is stronger than ever, and maximize the benefits for the members.