Building Trust Through Transparency: The role of financial education

By Nicole Kern, Zogo
November 25, 2024

Trust is crucial for any financial institution, including credit unions. Without it, members may hesitate to engage fully, missing out on valuable services and opportunities. As a result, the credit union may fail to grow and thrive.

One effective way to build this trust is through transparent and honest financial education. When members understand and trust the information provided, they’re more likely to develop long-term loyalty.

Let’s explore how sharing expert knowledge on all things finance, from budgeting to investing, can create an unbreakable bond between a credit union and its members.

Building Loyalty Through Trust

Trust builds loyalty, a key component of long-term success for any business. For credit unions, long-term loyalty means members frequently use available services, like loans and savings accounts, and stay with the credit union for many years (even as their financial needs change).

If your credit union consistently builds long-term relationships with members, you can expect to experience:

• Stable growth: Loyal members provide a steady revenue stream to help your credit union grow consistently without relying heavily on new members.
• Improved community reputation: Loyal members are usually vocal advocates. Their positive word-of-mouth or online reviews can boost your credit union’s reputation in the community and attract new members.
• Higher retention rates: Keeping existing members is often more cost-effective than constantly seeking new ones. High retention rates mean the credit union can focus on enhancing services rather than just marketing.

If you want to experience these results at your credit union, you’ll need to start with a foundation of trust, and education is the key component to building that trust.

Five Ways Transparent Financial Education Initiatives Build Trust

Here are five ways transparent financial education can help your credit union develop long-term relationships with members built on trust:

1. Members become less suspicious
Transparency cuts through the jargon, making complex topics simple to digest. On the other hand, keeping members in the dark by using complicated terms or vague descriptions can feel manipulative and erode their trust.

When you provide clear, straightforward information, you show that you have nothing to hide and are committed to your members’ financial well-being. This openness helps members strengthen their trust in your credit union.

2. Members learn how to minimize risks
Your credit union can reinforce member trust by educating them on what to look for when taking out loans or using other services. Knowing how to translate the fine print about products and services helps them to minimize perceived risks.

By teaching members how to identify fair loan terms, interest rates, repayment schedules, and potential penalties, you reduce their fear of unforeseen financial burdens. By being transparent, members feel safer about their money decisions and are more likely to choose your credit union for their financial needs.

3. Members want to get more involved
Providing transparent financial education encourages member involvement not just in learning, but in broader activities.

Educated members are more likely to engage in community initiatives organized by the credit union, such as financial literacy events and local projects. They’re also more likely to participate in online and offline discussions, sharing insights and learning from others while boosting your visibility.

Increased involvement builds trust since members see their credit union as a reliable partner in their financial lives.

4. Members consider you to be part of the community
Open and honest financial education helps credit unions become true community advocates.

One of the reasons people choose credit unions over big banks is because they value a personal touch and want to feel as if their financial institution is on their side.

By providing clear, accessible financial education, credit unions meet members where they’re already waiting and strengthen the institution’s reputation as a trusted community staple.

5. Members learn of your ethics and mission
Transparent financial education initiatives ensure that credit unions operate openly and honestly. By teaching members to understand important details like interest rates, fees, and loan terms, it becomes nearly impossible for a credit union to hide unethical practices like hidden fees or deceptive terms.

Three Financial Education Initiatives to Try

Is your credit union ready to implement financial education initiatives to enhance member engagement and trust? Here are three practical ideas to consider:

1. Workshops and seminars
Hosting regular workshops and seminars, either face-to-face or virtually, provides members with interactive and engaging learning experiences. These sessions can cover a range of topics, while direct interaction allows members to ask questions and get the answers they need in real-time.

While participants often leave feeling more informed and supported by their credit union, it can be difficult to get members to commit and show up in the first place.

2. Online learning portals
An online learning portal allows members to access financial education resources at their own pace. This portal can include articles, videos, quizzes, and interactive tools.

While this flexibility and open accessibility can greatly enhance engagement, creating content to cover all the necessary topics and financial literacy levels can be time-consuming and challenging.

3. Financial literacy app
A done-for-you financial literacy app can solve challenges like low webinar attendance and the time-consuming process of creating content. Features like gamification can keep members engaged and learning.

Credit unions can also personalize a digital financial program experience, tailoring content to meet members’ specific needs. Programs that offer integrations to your mobile banking platform or desktop website can also create a seamless financial wellness experience that boosts financial literacy, deepens member involvement, and builds trust.

Building Trust by Sharing Knowledge

Credit unions can enhance trust and empower their members by incorporating transparent financial education. This approach educates and connects members, leading to long-term loyalty and a more engaged community.

Connect with Zogo to learn more.

Originally posted on CUInsight.

About Zogo

Zogo helps credit unions educate, engage and attract young people. Backed by behavioral science research at Duke University, its gamified financial literacy app teaches sound financial fundamentals and rewards users for learning. Their mission is to make personal finance fun, simple, and social. Founded by Gen Zers, Zogo understands what it takes to reach the younger generation.