A lot has changed since the few months. We are dealing with the unknowns and uncontrolled, that creates an environment of uncertainty. This is accompanied by economic pains like rising unemployment claims, restricted or closed businesses, and many more fundamental changes which need time to be adjusted to. Human impacts include fear, stress owing to loss of income, closure of schools, foreclosures, evictions, etc.

For Credit Unions, industry impacts include likely branch closures, spike in mergers, member challenges of moving to e-platforms, and staffing challenges. You need a way to navigate out of the slowing revenue and compressed margins.

This article confirms to insights from the Keynote Session on 2020 Retail Trends by Jon Voorhees, Consultant, Peak Performance Consulting Group at the 5th Annual CULytics Virtual Summit.

1. Is the Credit Union Industry Shrinking? - Credit Unions haven’t been closing many branches and have been on a net neutral for the past ten years. It is not happening and is not expected to happen, at least in the short term. Total Branch Count is expected to shrink over time, as they are used less and less frequently, owing to digital facilities.

2. Credit Union Deposits- As compared to Banks, Credit Unions hold -10% of bank deposits with -25% of branch total. Although Credit Union deposits continue to grow, the rationale for why banks tend to garner more deposits is that scale tends to give an outsize advantage. Credit Unions have a smaller branch network as compared to their bank counterparts. This reduces the chances of ‘fair share’.

3. Shifting Channel Behaviors- Branch channel has to be evolved to service oriented channel. Everyone wants branches; they will just visit it less frequently. Now, sales are to be followed by servicing and then transactions, as compared to the earlier trend of sales, transactions being followed by services.

4. Generational Population Sizes- Gen-Z and Millennial represent 51% of the US Population which means they are critical to what happens to the Credit Union Industry over time. GEN-Z is more conserved financially, more engaged, and most diverse.

5. FINTECHs combine with financial services institutions to make inroads and maximize on niche opportunities. This trend is going to be on an increase.

6. Top marketing Trends include Optichannel marketing, the embrace of insights-driven marketing, greater awareness of customer journey, Increasing focus on ROI, and integration of mobile which is now a necessity.

PATH FORWARD OPTIONS

Your path forward relies on how much you wish to do and what your first move will be.

1. Create a Bigger Scale- It gives you an advantage and increases chances of above fair-share performance long term. You can accelerate growth plans through mergers or expansions. Organically, it takes time, and in the case of mergers, there are limited options. This process can also be expensive in the short term.

2. Transform by creating Next-Gen Credit Union. Design your Credit Union for future generations. Though no one has figured this out completely yet, and there are complex questions about integrating channels, it is a long process and should focus on building your heritage.

Conclusion

Change is hard but changes we must. There is no “silver bullet” for Branch Transformation. Mergers are bound to spike owing to a ‘search for scale’. Omni-channel investments are likely to increase owing to the need to streamline customer journeys so that they are in an integrated system. What is most expected is continued evolution and not revolutionary change.