Skip to main content

Navigating the Evolving Credit Union Landscape in 2024

The frontrunner CUs will prepare to capitalize on fluctuations in the economy, technology and regulations.

By Jody Bhagat | March 22, 2024 at 09:00 AM

2024 printed on road Credit/AdobeStock

As we find ourselves nearly three months into 2024, several developments are shaping the credit union landscape faster than ever before. Greater member attrition, increasing digital migration, heightened regulatory scrutiny and the emergence of artificial intelligence are coming together against economic uncertainty. Credit unions face difficult prioritization in this fluid climate. One prediction seems sure: We'll see further divergence between top-tier credit unions and the rest of the pack over the next 18 to 24 months.

While most concentrate on driving efficiencies and cost reductions in 2024, progressive institutions are strategically boosting investments in critical capabilities for an edge. History shows this advantage can expand when competitors simply hunker down. What priorities should lead the agenda ahead? Here are four key areas credit unions should consider moving up on their priority lists.

1. Realizing tangible value from major initiatives.

Many credit unions have started on ambitious modernization initiatives across four areas: Data infrastructure, core system upgrades, digital platform enhancement or post-merger integration. For some, these resource-intensive undertakings are long-term plays focused on building essential competitive strengths over time. However, with mounting cost pressures, these complex attempts may demand that their efforts prove material, near-term returns that warrant ongoing expenditure. Credit unions should identify high-impact applications that can speed up the realization of benefits, re-evaluate transformation roadmaps for phased rollouts that extract value faster and combine them with operational efficiency programs.

Credit unions have to strike a balance between making progress on modernization while also demonstrating concrete dividends from early accomplishments. For instance, rather than rolling out a wholesale data transition over two years, credit unions could prioritize specific "use cases" based on a narrower collection of data assets. This generates ROI through better member intelligence while methodically strengthening the overall environment.

Leading credit unions recognize that transition for its own sake no longer cuts it. They have to maintain a sharp focus on step-by-step priorities that move them to modern systems while also fueling momentum through early wins.

2. Battling for deposits through member engagement.

The intense competition for core deposits is now a top priority for most credit unions. Rising funding costs, account outflows and thinning margins put institutions in a battle for any advantage to attract and retain deposits. However, promotional rates alone rarely work on their own anymore amid the current competitive landscape.

McKinsey research found two key demographics – young/high income and middle age/high income – account for over 60% of deposits prone to switching institutions. The former shows a switching likelihood 3x higher than the latter. Credit unions that understand and fulfill distinct member preferences can draw more deposits compared to rivals.

While pricing stays important, the focus should shift toward member engagement by providing customized solutions grounded in behavior and product innovation. Such personalization represents the main factors in securing future deposits.

Savvy credit unions engage members through tailored offerings – like "savings boosters" – that benefit both sides. Adoption of these tools can as much as double the credit union's ability to capture more wallet share through additional product relationships.

As credit unions empower members with more control through customized insights and tools, they build trust and loyalty beyond temporary rate incentives. The winners in this intensifying battle will be those that leverage rich member understanding to demonstrate they have each person's best interest in mind. Prioritizing engagement and trust now yields higher account balances later.

3. Journeys become the priority.

Members have many financial objectives, like increasing savings, reducing expenses or improving credit health. These goals evolve as people's financial situations change over time. These "jobs to be done" require more than a single move – they're a journey.

In 2024, credit unions will get better at identifying members' most critical financial journeys. They will then curate products, tools, trackers and content to quicken progress along those paths. Rather than promoting generic offerings, credit unions will facilitate members spelling out their goals and tailor solutions to streamline their achievement.

Of course this will be a phased approach, initially focusing on the top priority journeys detected. The key is coordinating across channels and products to smooth the complete trip. An added payoff for credit unions is heightened member loyalty and deeper relationships with those who allow the institution to assist them with these journeys.

4. Targeted proposals that showcase genuine personal value.

The era of bland, generic marketing banners is coming to an end. Today, members simply disregard credit union marketing banners, even with sophisticated back-end targeting. Even targeted banners on authenticated sites convert at around just 1%. Members feel credit unions are just trying to sell them something, so it's understandable that few people actually click them. The only real justification for using banners is that credit unions can display them at high volumes, meaning a small fraction of clicks still accumulates.

In 2024, we may see the inception of a new concept: Personalized engagement marketing. Credit unions can harness their knowledge of individual member transactions and behaviors to deliver personalized proposals that show precise personal savings based on spending habits. This is a big shift – fundamentally evolving the whole engagement process between credit unions and consumers.

This breed of data-driven personalization is an example of the future of credit union marketing. Leveraging the latest data and analytical capabilities, credit unions can put together targeted guidance that can foresee what members need. This tailored advice resonates not only because it comes from the member's own activity, but also because it's highly customized to the member's conduct and needs. Targeted guidance grounded in a person's behavior converts because it proves the credit union truly understands them and has a genuine interest in strengthening their financial life.

Looking Ahead

Credit unions face some tough choices in 2024. Compounding the fiscal strain is that these choices will have a lasting influence on a credit union's competitive stance and financial performance. Credit unions need to purposefully concentrate on their abilities that augment the value they provide members, and have that value be unique. Even with so much uncertainty, one thing holds steady – only slashing expenses won't suffice.

The frontrunners in this new credit union world will prepare to capitalize on fluctuations in the economy, technology and regulations. They'll cultivate skills not just to keep pace, but to refine their unique value. Credit unions that embrace change and original ideas can sidestep stagnation, even as fights escalate over deposits, trust and members.

With intensifying competition ahead in 2024, forward-thinking credit unions will prioritize building stronger member loyalty and service, expanding the gap with lagging institutions.

Jody Bhagat Jody Bhagat

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>»

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>»

James Hunter, Executive Director of Credit Union Development for New Orleans Firemen’s CU, knows too well how expensive it is to be poor.

  NEW ORLEANS FIREMEN’S FCU 􀀁 METAIRIE, L   A passion for empowerment James Hunter knows too well how expensive it is to be poor. It’s what he sees every day as mortgage director and executive director of credit union development for $182 million asset New Orleans Firemen’s Federal Credit Union, Metairie, La., and executive director of The Faith Fund, a nonprofit partnership that seeks to provide a financial hand-up to the undeserved. It’s what inspires him to come to work every day and drives his passion of empowering people and setting them on the path to financial security. “Too many people are too far away from the starting line,” Hunter says. “Payday loans are a big business in Louisiana. Exorbitant fees and interest from payday loans drain more than a quarter of a billion dollars a year. Baton Rouge supports one of the top three pay-day loan markets in the U.S.” The Faith Fund was formed to counteract that. It’s a unique cooperative relationship between like-minded busi...
Post a Comment
Read Complete Article HERE>»

Boston Firefighters Credit Union can open membership to police officers

  By Deirdre Fernandes Globe Staff  February 12, 2015 The Boston Firefighters Credit Union will be able to open its membership to the city’s police officers and other law enforcement officials, a Suffolk County Superior Court judge ruled Thursday. Judge Mitchell Kaplan rebuffed an attempt by the City of Boston Credit Union to stop the firefighters credit union from expanding its membership and taking away some of its most lucrative customers: police officers, who are among the highest-paid city employees. The turf battle between the two financial institutions grew unusually emotional as they accused each other of distorting facts and invoking the events surrounding the Boston Marathon bombing to promote their cause. David Cotney, the state’s commissioner of banks, had approved the firefighters’ expansion plans in November. But the city’s credit union filed a court injunction to stop it. In his decision dismissing the case, Judge Kaplan said the commissioner’s decision ...
Post a Comment
Read Complete Article HERE>»

What Trump’s ‘one big beautiful’ tax-and-spending package means for your money!

  Trump’s megabill will bring sweeping changes for household finances. President  Donald Trump  signed his “one big beautiful” tax-and-spending package on July 4 — legislation that will bring sweeping changes to Americans’ finances.  After the  Senate passed its version  on July 1, the House Republicans on July 3  voted to approve  the multi-trillion-dollar domestic policy legislation and send it to Trump’s desk for signature. The final bill makes permanent Trump’s  2017 tax cuts  while adding new relief, including a senior “bonus” to  offset Social Security taxes  and a  bigger state and local tax deduction . The plan also has tax breaks for  tip income , overtime pay and  auto loans , among other provisions.  The GOP’s marquee legislation will also enact deep spending cuts to social safety net programs such as  Medicaid  and food stamp benefits,  end tax credits tied to clean energy  an...
Post a Comment
Read Complete Article HERE>»

World's Happiest Country

  World's Happiest Country   Finland was named the world’s happiest country for the ninth consecutive year, the latest World Happiness Report revealed. Nordic countries—including Denmark, Iceland, Norway, and Sweden—also ranked in the top 10.  Analysts attribute Finland’s joy factor to its wealth, social safety network, and high life expectancy, among factors. Afghanistan maintained its place as the world’s unhappiest country. The results were based on answers from roughly 100,000 people in 140 countries and territories. Respondents were asked to rank their life satisfaction on a scale of 0 to 10. Finnish respondents gave an average life satisfaction score of 7.7; Afghans answered 1.4. The US, in 23rd place, reported an average score of 6.8. Explore rankings here . The report's authors cautioned this year that social media use is driving population-level drops in reported well-being among adolescents. Young English...
Post a Comment
Read Complete Article HERE>»