What’s really killing small credit unions?

As you read this remember,
"You are not alone with NCOFCU!"

June 21, 2024 by Becky Reed, BankSocial

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There has been much attention given to the rapid disappearance of the small, local credit union. About a hundred reasons have been cited for this disturbing trend—from lack of succession planning to the cost of compliance. While any of those hundred reasons could be part of the problem—there is one I believe is central to a small credit union’s inability to survive: The Core

Let’s look at the advantages of being a small, local credit union:

• Ability to provide very specific products that meet the needs of the local community
• Small hyper-focused team that can make decisions quickly
• Short implementation cycle due to less red-tape and structural roadblocks

A small credit union can leverage these advantages by:

• Testing out innovative ideas
• Changing course or pivoting rapidly
• Implementing changes quickly

With all the advantages of being small, why do so many smaller credit unions struggle to capitalize on these key differentiators? It all comes down to technology and a small credit union’s inability to leverage modern tools due to an anything-but modern core. Most cores were created before the turn of the century with some of the more popular ones being closer to the mid-1900s. The technology landscape looked completely different in 1980 than it did forty years later in 2020. But many smaller credit unions, especially those under $75 million in assets, are still operating with a core from 1980 (or before!). So, why haven’t they switched Again, many reasons for this include long term contracts or lack of resources, but the main reason is that most of the cores out there just don’t cater to the small credit union market. So, this market has fewer choices. The result of this is that the smaller credit unions just cannot adopt newer technologies to enhance both the member and the employee experience because their core just can’t handle it! This is a travesty.

So, how do we fix this?

• Educate small credit unions on their options
• Use our collaborative superpower to leverage collective bargaining so that a group of credit unions can convert to a more popular core together
• Help small credit unions tap into their key differentiator—being small and nimble

Small credit unions are the lifeblood of our industry. The credit union philosophy of people-helping-people is lived out daily in their deep connection to their community. There is help available and a whole lot of people dedicated to the survival of this key market. To learn more about how you can get involved or get help, reach out – let’s talk!

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Becky Reed

Becky Reed is a credit union industry veteran and thought leader with more than two decades of experience in credit unions and CUSOs. Renowned for her unique perspective as a ... Web: https://www.banksocial.io