New blog post—Rethinking PFI
The financial services industry has been throwing the phrase Primary Financial Institution (PFI) around for decades. Credit unions are no less enamored of the concept than are their for-profit competitors. Certainly on the face of it there is a good reason for pursuing this lofty status with the consumer. Strong relationships and share of wallet are the pathway to marketing efficiency, better share of wallet, and long term loyalty, which the data prove yield increased revenue.
However, like many popular catch phrases, “primary financial institution” gets tossed around without much care and it is often used in ways that are imprecise and meaningless to the audience being addressed.
Some industry pundits speak of the idea of achieving a certain level of PFI status as though it is a measurable goal like a loan to share ratio or checking account penetration statistic. They give the impression that PFI is conceived of and measured in an identical fashion from one institution to the next.
So just what is the generally accepted measurable definition of primary financial institution? Take your time. Google it if you like. A place where consumers have their most important and frequently used accounts is a favorite definition. How do you measure that? An institution where the consumer has their checking account? Maybe they have multiple checking accounts? Or maybe in 2013 “checking” is not a term that is meaningful to a sizable percentage of the population. The point that I am making is that while PFI is a very important and meaningful concept on an individual credit union level it is of virtually no use as an industry standard. It is a “soft” term.