Skip to main content

Staying Competitive: 5 Strategic Priorities


Over the last decade, the function of a credit union branch has shifted and there have been two contributing factors: The global pandemic and expedited digital transformation.

First, the pandemic has drastically changed the way members expect to bank. At the height of the pandemic, many branches closed or reduced traffic. Members that wouldn’t typically have chosen digital banking opted for it to meet their banking needs. The shift away from branch-based services during the pandemic helped baby boomer and Gen X members adopt digital banking when they may not have otherwise.

Even without the impact of the pandemic, the transformation to digital-first processes and products has been underway for some time. This transformation has steadily been shifting the branch’s purpose away from basic transactions to more sophisticated member interactions. The pandemic merely accelerated this shift, and it is becoming vital for credit unions to embrace digital transformation to stay competitive.

Competing for Business

Over the last several years, credit union competition has evolved and expanded. Banks were once the primary competition for credit unions. Now multiple, non-traditional, digital banking options are making it increasingly difficult for credit unions to compete. Some of these branchless competitors include:

  • Fintech companies;
  • Neobanks;
  • Digital-only financial institutions;
  • Digital-first lenders and investment firms; and
  • Mobile payment platforms.

As competition increases and continues to expand into new markets, there are resources and strategies that credit unions can leverage to maximize member service and profit. Here are five growth strategies to help credit unions of all sizes maintain their competitive edge.

1. Fast track digital transformation. Some may say that digital transformation is beginning, but we argue that it’s already here. Although the pandemic highlighted the need among credit unions for digital transformation, it was already apparent that credit unions needed to adapt digitally.

Digital transformation in 2022 is being fueled by artificial intelligence. Conversational AI is becoming the norm in both business infrastructure and consumers’ daily lives. AI deploys data to replace and improve business functions and is impacting the credit union industry by improving operations, member service and digital tools. Amplifying AI technology will enhance member relationships and can help credit unions prepare for future branch disruptions.

2. Centralize member data. Your members’ data can help your credit union identify the most profitable members and predict their behaviors, as well as uncover red flags for potential risk.

Prioritize member relationships and continue to generate revenue while mitigating risk.
By Traci Mottweiler CUTimes

Centralizing member data is crucial for digitally transforming your credit union, and to enhance and streamline risk determinations, growth opportunities and member communication. Once data is centralized through a single data engine, it can then be automated to predict member behaviors, giving you a 360-degree view of your member.

These analytics can also point to increased or decreased loan risk for specific members or groups of members.

3. Mitigate lending risk. In a turbulent market, identifying and avoiding loan risk is vital for portfolio health and growth. While it is promising that the average FICO has increased since the pandemic, according to FICO, this cannot determine future payment ability or overall loan risk. Relying on the FICO score alone could lead to missed opportunities for underserved markets or additional risk for high-risk borrowers. Using member data and a proven forecasting solution can help mitigate lending risk. Additionally, consider adopting new protection solutions that can be bundled with loan products, such as unemployment protection and loan warranty, to protect both your members and your portfolio.

4. Drive alternative revenue. It is necessary, but challenging, to balance revenue growth with risk protection. Offering deposit solutions and enhancing online banking capabilities (such as remote deposit capture) growth can offset loan risks.

In addition to loan and deposit revenue, noninterest income can help drive income and maintain profits. Protection products for auto loans and mortgages can help protect members during financial crisis and uncertainty while addressing margin compressions and liquidity concerns.

5. Evaluate industry partnerships. As credit unions look for ways to streamline processes and leverage human capital, review what new solutions are available in the marketplace to outsource. Since the pandemic, many credit unions are outsourcing aspects of business that previously wouldn’t have been considered, including AI, data analytics and modeling, the call center, collections and recovery solutions. Outsourced solutions should always support your credit union’s strategic objectives.

Despite a turbulent market and shifting member expectations, the credit union mission holds fast. Prioritizing member relationships and continuing to generate revenue while mitigating risk are strong growth strategies that will help credit unions maintain their competitive edge.

Comments

Popular posts from this blog

Digital Payments Lead the Way Globally: Key Insights from Worldpay Study

According to a recent Worldpay study, digital payments are rapidly becoming the preferred choice worldwide. The research highlights significant shifts in consumer behavior and payment preferences, driven by technological advancements and the growing acceptance of cashless transactions. Key findings from the study reveal that digital payments now account for a substantial portion of global transactions. Mobile wallets, contactless payments, and online banking are gaining traction, reflecting consumers' desire for convenience and speed. This trend is especially prominent in regions like Asia Pacific, where mobile payment adoption is leading the charge. The study also emphasizes the importance of security in fostering consumer trust in digital payments. As fraud concerns continue to rise, businesses must prioritize robust security measures to protect customer information and enhance the payment experience. Moreover, the transition to digital payments is not just about c...

Embracing ARMs And Battling Members’ Misconceptions

With adjustable-rate mortgages back in fashion, credit unions are educating members about the ins and outs of these products, dispelling misunderstandings along the way. With housing stock low, home prices high, and interest rates showing no signs of coming down, many credit unions are turning to adjustable-rate mortgages to help would-be borrowers find a home. ARM loans gained a bad reputation after the 2008 housing crisis and the Great Recession, but credit union leaders insist that with the right education and a clear understanding of how the product works, adjustable-rate mortgages can be an ideal solution for would-be homeowners. The Big Picture53% of those who don’t own a home believe homeownership is out of reach, according to a study from Northwestern Mutual . 58% of millennials feel this way, but roughly half of baby boomers and Gen X share the sentiment. According to Federal Reserve data, the average price of a home topped $510,000 at the end of 2024. That’s 32% higher than f...

Jim Nussle To Retire From America’s Credit Unions

  WASHINGTON—America’s Credit Unions President and CEO Jim Nussle plans to retire from the trade association, ACU announced. ACU said Nussle did not specify an exact date for his retirement but rather expressed his desire to provide the ACU board the “full flexibility” to conduct a search for a CEO over the next several months on a timeline of their choosing, and to ensure his ongoing efforts to champion the organization’s advocacy agenda.   Jim Nussle “Serving credit unions is a deep personal privilege. After a long career in advocacy from both sides of the policy making table, leading CUNA and the honor of helping to create and lead America’s Credit Unions, it is soon time for me to pursue new interests in retirement. My announcement today is intended to provide the board the time to conduct a thorough national search to find the next leader for the Association,” Nussle said.  “My full and ongoing focus will be on our intensive credit union advocacy efforts to prot...

Havoc.’ ‘Debacle.’ Analysts See Rough Road Ahead for Autos With Tariffs

WASHINGTON–What’s known: should President Trump’s tariffs remain in place, new and used vehicle prices are going to get even higher. The unknown: Will members stop buying cars, move from new to used, or given how many buy cars according to payment, move to less-expensive models? The tariffs also may create challenges for credit unions that serve some autoworkers. All of those questions and more remain much in flux with analysts predicting  auto prices could rise by $5,000 to $10,000 per vehicle and wreak havoc on the market as the result of 25% import tariffs on vehicles and auto parts.   As the CU Daily reports separately, however, Black Book believes automakers will spread out the incremental cost of tariffed vehicles across their entire showroom to retain relative vehicle transaction prices. Still, the company expects tariffs to push the average transaction price on vehicles to more than $50,000. ‘A Debacle’ “The tariffs are a debacle of epic proportions for the a...

Zelle Discontinues Standalone App, Shifts Users to Bank and Credit Union Platforms

SCOTTSDALE, Ariz.—The standalone Zelle app is no longer available for sending or receiving money. Users are now encouraged to enroll through a participating bank or credit union’s app to continue using the peer-to-peer payment service, PYMNTS reported. Zelle had announced in an Oct. 31  blog post  that it would make this change, and it completed the move as of Tuesday (April 1), according to a frequently asked questions  page  on its website PYMNTS said/ “More than 2,200 banks and credit unions across the U.S. now offer Zelle through their mobile app or online banking site,” the company said on the FAQ page. “As a result of this growth, in October of 2024, we announced that we are removing the ability for users to send or receive money using the Zelle app starting April 1, 2025.” PYMNTS noted that the page advised users of the Zelle app to visit a “find your bank” page on its website to see if their bank or credit union offers Zelle; to...