The Secret To Product Penetration May Lie In Your Region

Each region in the U.S. has a particular product penetration strength, from credit cards in the Southeast to real estate loans in the Northeast.


Credit unions exist to meet the needs of their members. But identifying those needs can be a challenge. What consumers are demanding on the West coast is sometimes completely different from consumers on the East coast. What worked well for a credit union in Florida might fall flat for a credit union in Minnesota. Product penetration metrics measure the percentage of members using a specific product. There are four main product penetration metrics: share draft, credit card, real estate, and auto. For this article, we divided the country into four peer groups: Northeast, Southeast, Central, and Western. (*See below for our breakdown.)

Rk Credit
Rk Real
Rk Auto Rk
Central CUs 44.7% 4 12.5% 4 4.4% 2 18.2% 1
Northeast CUs 48.5% 3 14.3% 3 5.7% 1 12.8% 4
Southeast CUs 51.1% 2 17.6% 1 4.2% 3 14.5% 3
Western CUs 55.5% 1 15.5% 2 4.2% 4 16.8% 2
All U.S. CUs 49.6%   14.1%   4.5%   16.0%  

Each region was a leader in one of the four product penetration metrics: the West led in share draft penetration; the Southeast placed first in credit card penetration; the Central region ranked at the top of auto loan penetration; and the Northeast was claimed the largest percentage of members holding a real estate loan.

Other interesting observations emerged from this study that offer important takeaways for credit unions. Nearly 53% of credit unions in the Southeast offered credit cards in 2011, with an average penetration rate of 17.6%. Big players in the credit card market, namely Pentagon Federal Credit Union ($15.1B, Alexandria, VA) and Navy Federal Credit Union ($49.9B, Merrifield, VA), specialize in credit card lending and are headquartered in this region, and are boosting the Southeast credit card penetration. However, the West and Central regions had higher percentages of credit unions participating in credit card lending – 65% and 54%, respectively – yet they had notably lower penetration levels than the Southeast. This highlights the fact that a credit union may offer a product, but that does not mean members will use it. A high percentage of the credit unions that offer credit cards in the Central region had penetration rates well below 10%.

Auto loan penetration, highest in the Central region, uncovers another regional difference in strategies. At 18.2%, the auto loan penetration in this area is comfortably higher than the other three regions. This could be because there are fewer competitors in the auto market in these states. Total auto market share for the Central states was typically higher than the national average of 14.6%. In contrast, market share was lower in the Northeast, where more players are involved with auto lending.  With more alternative lending choices for their members, credit unions in the Northeast must increase their promotions to keep their members borrowing from them.

National and regional trends can help paint an overall picture of product demands, but exceptions always exist, so credit unions should research their product offerings and continue to try to offer a variety of products. However, credit unions might want to invest some time in considering what their members need most.

*Central: ND, SD, NE, KS, OK, TX, LA, AR, MO, IA, MN, WI, IL, MI, IN, OH

*Northeast: ME, NJ, VT, NY, PA, MD, DE, NH, CT, RI, MA, DC

*Southeast: WV, VA, KY, TN, MS, AL, GA, FL, SC, NC

*Western: AK, HI, WA, OR, CA, AZ, NM, NV, UT, CO, WV, ID, MT




March 19, 2012


  • I apologize, the state of New Jersey was included in the data for the Northeast, but in the breakdown following the article, New Hampshire was listed twice instead of New Jersey. Sorry for the confusion!
    Mark Reed
  • You forgot about New Jersey. That's where the NY Giants play football and where the NY Jets play football. We have lots of credit unions here, too. Last time I checked, we were in the Northeast section of the country. Right next to New York.
    james dufford
  • Your data also raises a bit of a red flag, more in the West but overall in general. Share draft penetration is significant for all areas. This is also a product that is under major evolution due to other payment channels becoming increasingly the path opted for by both our member consumers and retailers. And the impact of this evolution to us all?
    Rick Stanton