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

Post a Comment

Please no profanity or political comments.

Popular posts from this blog

Why Auto Lending Is Starting To Stand Out As A Real Threat To CUs

  By Ray Birch MILWAUKEE—Auto lending is emerging as one of the biggest areas of risk for credit unions, even as the broader U.S. economy continues to perform better than many expected, according to Bill Handel, chief economist at Raddon, a Fiserv company. Delinquency trends in auto portfolios are now approaching levels last seen during the Great Financial Crisis, Handel said, driven by a combination of high vehicle prices, elevated interest rates and increasing financial pressure on lower-income consumers. “There’s probably still a lot of risk in the auto portfolios,” Handel said. “Our numbers in terms of delinquency behavior in the United States are now rivaling what they were during the Great Financial Crisis.” Economy Holding Up Better Than Expected Despite those pockets of risk, Handel said the broader economy remains surprisingly resilient. “If you look at the U.S. economy, it’s actually performing quite well—probably better than most people would have anticipated,” he said. ...
Post a Comment
Read Complete Article HERE>»

When Cooperation Turns To Competition: A Turning Point For The Firefighter Credit Union Movement

  By Grant Sheehan For decades, firefighter credit unions have stood as a model of what cooperative finance is meant to be—institutions built not to compete ruthlessly, but to serve a shared mission: supporting the financial well-being of those who risk their lives in service to others. That’s what makes the recent actions of Firefighter First Credit Union so concerning. Firefighter First FCU was not just another participant; it was a founding member of the National Council of Firefighter Credit Unions (NCOFCU). It helped shape the very principles of collaboration, mutual respect, and non-encroachment that have long defined our community. Those principles weren’t accidental; they were intentional safeguards to ensure that firefighter-focused credit unions could grow together, not at each other’s expense. But something has changed. Firefighter First FCU’s decision to pursue a nationwide charter marks a clear shift in direction—from cooperation to direct competition. This isn’t simpl...
Post a Comment
Read Complete Article HERE>»

Small Credit Unions Don’t Lack Representation—They Lack Board Education

  By Grant Sheehan Let’s be clear— representation  for small credit unions is not something new that suddenly needs to be invented. For more than 150 years in Europe and 115 years in the U.S., many of us—along with numerous trade groups representing postal workers, schools, hospitals, the military, first responders, electricians, welders, auto workers, and many other sponsor employee groups—have been actively representing and supporting small credit unions. The mission has always been the same: protect these institutions and ensure they have a voice. The real challenge facing small credit unions has never been a lack of organizations claiming to represent them. The challenge has been engagement and education. Many small credit unions operate with extremely limited resources. Their boards are made up of volunteers who already have full-time careers. Even when scholarships, training opportunities, and conferences are offered, the realities of travel costs, staffing shortages, op...
Post a Comment
Read Complete Article HERE>»

With Graham Signaling New Budget Bill, Credit Unions Brace For Tax Debate

By Ray Birch WASHINGTON— Senate Budget Committee Chairman Lindsey Graham’s comments Wednesday that Republicans will “expeditiously move toward creating a second budget reconciliation bill” are giving new shape to what had been a speculative discussion in Washington—and prompting renewed attention within the credit union industry to whether the movement’s federal tax exemption could again surface as lawmakers look for possible offsets. In a post on X, Graham said that after consulting with President Trump, his team and Senate Majority Leader John Thune, the Senate Budget Committee will move quickly on a second reconciliation package focused on “adequate funding to secure our homeland” and support for the military. The remarks are notable because they offer one of the clearest indications yet that a second fast-track budget measure—previously discussed but far from certain—may now be gaining traction. CUToday.info on Wednesday reached out to House Budget Committee Chairman Jodey Arringto...
Post a Comment
Read Complete Article HERE>»

Sunday Reading - How were the National Parks started?

  America's 'Best Idea'       How were the National Parks started? America's National Park System includes roughly 85 million acres of US territory, equal to the size of Germany, set aside by federal law for preservation. There are 63 areas officially designated as national parks—including the Grand Canyon, the Great Smoky Mountains, and Acadia—and more than 400 additional smaller units ( see map ). In 1872, Yellowstone was established   as the first national park dedicated to public enjoyment and recreation, though its foundation also  displaced several Native American tribes . By 1916, the growing system required the creation of the National Park Service to preserve its lands for future generations. Eventually, hunting and logging were banned in the parks, though regulated extractive activity is still permitted in nati...
Post a Comment
Read Complete Article HERE>»

Celebrating 40 Years Of Credit Union Impact

From shaping the industry’s approach to data to framing the conversation around key industry issues, here’s a look at the impact we’ve made — and what’s to come Aaron Passman Let’s take a trip back in time. It’s Monday, April 1, 1985. You’re headed home from work at the credit union, one of more than 10,000 nationwide. You’re sitting behind the wheel of a Chevy Cavalier — the top-selling car in America at the time — with “We Are The World” piping out of the speakers. Not surprising, as it’s the No. 1 song in the country. You’ve got to make a stop at the grocery store, where the price of eggs has dropped to about 50 cents a dozen — roughly 20 cents cheaper than one month prior — but you’re already starting to think ahead to the weekend. Maybe you’ll head to the theater for “Police Academy 2,” and see what all the fuss is about — after all, it’s the most popular movie in America. But tonight you’re planning to sit down for the NCAA championship game to see whether Villanova can pull off ...
Post a Comment
Read Complete Article HERE>»

Setting & Meeting Your 2018 GOALS - Dan Berger

A new year provides a fresh start and a clean slate and is often the time when resolutions and goals are established. If you are in the process of setting new goals – as I am – know that with an open mindset, achievement of all your goals is possible. "Goals provide clarity," writes Mareo McCracken, revenue leader of Movemedical. He explains that goal setting is about "combining the fortitude to achieve with clear thinking while making sense of your purpose and defining your ability to deliver value to others." However, goal setting and achieving also requires faith – or believing and hoping in something you can't see yet or that doesn't quite exist. For many of us, the No. 1 reason we don't achieve our goals is that we lack belief in ourselves and our abilities. I encourage you to read an article by Inc.com contributor Benjamin Hardy  that details the importance of having this kind of faith in yourself and delivers some tips on how to achie...
Post a Comment
Read Complete Article HERE>»

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...
Post a Comment
Read Complete Article HERE>»

Lifesaving Companion Dog Takes On New Role With Injured Firefighter « CBS New York

Lifesaving Companion Dog Takes On New Role With Injured Firefighter « CBS New York : "NEW YORK (CBSNewYork) — A badly injured New York firefighter received a companion dog whose already saved people’s lives from fire. As CBS2’s Dave Carlin reported, disabled firefighter Tom Prin beamed as he was officially presented with his new canine companion Halona inside of a packed ceremony in Suffolk County. The former firefighter was one of 15 people receiving their canine companions. Prin was chosen because of what he’s been through — after fracturing his neck and back while responding to a Brooklyn fire. “When I was going from the third to fourth floor, the steps gave out and I fell through the fire escape,” he said. Prin has endured five spinal surgeries, but the Holtsville man will now be comforted by Halona who has quite the lifesaving resume herself." Click HERE to read full story and see video 'via Blog this'
Post a Comment
Read Complete Article HERE>»