Executive Summary
Trust is a necessary ingredient for building a successful long-term relationship. Trust, as used in this report, refers to an individual’s confidence that a service provider will fulfill its obligations responsibly and promote the consumer’s best interests. Specific to credit unions, it means the member can confidently expect the credit union to deliver on its promises in a dependable manner. Further, it assumes that the credit union will not abuse the relationship.
In return, the credit union can expect a more loyal member who is more apt to commit to a long-term relationship, transact repeat business with the credit union and perhaps even refer friends and family for additional business.
A more fundamental question is how trust is developed between a member and a credit union. What specific behaviors and practices of the credit union are more likely to build or erode the member’s trust? And do trust-building processes differ by generation?
What is the research about?
The research reported here looks at factors affecting consumers’ assessment of a financial institution’s trustworthiness following the completion of a loan transaction. In particular, it looks at differences in evaluative criteria among Generation Y (born after 1980), Generation X (born between 1965 and 1980) and Baby Boomers (born between 1946 and 1964). It also compares the assessment of trustworthiness between credit unions and banks. Six dimensions are identified in the study as building trust and loyalty in a financial institution: competence, benevolence, integrity, problem-solving skills, communication, and resemblance.
What are the credit union implications?
Credit unions can use these findings to learn 1) which attributes are most important when selecting a financial institution for a loan, 2) which of the six dimensions of trustworthiness are most important by generation group in building a trusting relationship, and 3) which dimensions by generation will result in sufficient loyalty to cause the member to transact repeat loan business and refer others to the credit union. As credit unions seek ways to gain the business of young adults, obtaining their trust and loyalty will be critical.
This report is sponsored by PSCU Financial Services.