Banks and credit unions; where you see one you’re sure to find the other. The challenge is understanding what sets them apart. They both offer loans and deposit products, so what makes them different?
The following is a quick snapshot on the primary differences between banks and credit unions; determining which one is best for you, ultimately, comes down to your specific needs and financial goals.
A Numbers Game
Before diving into the specific differences between banks and credit unions, it’s helpful to have a current snapshot of the numbers representing them. According to Lumen’s 2021 industry profile, there are approximately 5,000 banks and 5,300 credit unions currently in operation throughout the United States. When it comes to assets, banks boast an estimated $13.5 trillion, while credit unions have approximately $812 billion.
Keeping these numbers in mind should help shed some light on the realities driving both institutions when it comes to customer service, fees, interest rates, and technology.
Banks vs. Credit Unions: Customer vs. Member
In general, if you choose to do business with a bank, you’re considered a customer; whereas, credit unions are operated as memberships, making you a member. While this might seem like an insignificant difference, the labels reflect the actual structure of each financial institution. Credit union memberships offer members a chance to weigh in on how the credit union operates.
On the other hand, because some banks are owned by investors, and all are for-profit, you, as a bank customer, will not advice on the bank’s operating decisions. However, many smaller or regional banks are known as mutual savings banks, which means no stockholders and they are far more community-focused.
Investors Often Impact Customer Service
Although you should expect exceptional customer service from your banking institution, it is fair to say that the structure of a bank run by investors makes the delivery of that service more uniform and rules-based. This is particularly true of large, national banks.
In other words, the smaller or local nature of a credit union — and the fact that credit unions answer to their members — grants them more opportunity to be flexible when it comes to decisions about loans, for instance.
However, smaller, local banks are also interested in fostering lasting customer relationships and are motivated to go the extra mile to work with their customers and help facilitate whatever decisions are necessary to realize their financial goals.
In fact, Franklin Savings Bank is a mutual savings bank so there are no investors, it is not publicly traded, does not have stockholders, and, instead, is run by a board of community members. Customers at Franklin Savings Bank do have a voice and are heard more than they would be at a large stock bank.
Technological Advantages Goes to Banks
Getting back to the for-profit structure of banks as businesses, it makes sense that banks typically have larger budgets than most credit unions. For that reason, they have more to spend on new technology and services, specifically when it comes to online or mobile banking. While the majority of credit unions do offer technology-based services, you can expect more advanced versions from your bank.
Banks: Products and Locations Galore
Similar to the technology budgets, banks tend to offer their customers far more products, branch locations, and ATMs which translates to increased convenience for their customers. Depending on what you’re looking for when it comes to investments, a bank is likely the better bet for your business. On the other hand, credit unions often feature better interest rates for various types of loans and certain savings accounts. All the more reason to examine what matters to you when it comes to your current financial needs and goals.
At Franklin Savings Bank, we take pride in delivering exemplary customer experiences, featuring the solutions our clients need in order to feel confident and in control of their financial futures.
Contact us today when you’re ready for smarter banking solutions so you can live easier!
