The evolution of credit unions – part 1

“We opened this credit union out of a shoebox in the break room of this factory.”
 You’ve all heard the story … heck, many of you still tell it. And while it is a great story, the days of the shoebox and the loan on a handshake are past.  The credit union movement is evolving at light speed.

In this 3-part series, we will examine the evolution of credit unions from consolidation and growth to the impact of the information age.

First, let’s look at the numbers. Credit unions are declining in numbers but growing in assets and membership:

•  Number of CUs decline 15.2% since 2009.
• Assets increase by 20.1%
• Membership increases by 7.4%

Credit unions in the US are healthy but for how long?

In short: large credit unions are getting larger, smaller and mid-size credit unions are merging or being merged into larger credit unions. Forecasts suggest that within the next 20 years, one-third to one half of credit unions that exist today will no longer exist as a result of mergers, regulations, compliance, competition, a lack of management expertise and poor succession planning. What is your plan to effectively address the rapidly changing credit union environment? How will your credit union complete and thrive or are you on of the casualties of change?

Consolidation, however, is not the only major factor driving this evolution. Credit unions are also expanding their field of membership) to be able to attract more members to achieve economies of scale to more effectively compete against community, regional and national banks, and non-traditional financial service providers to satisfy their member’s expectations. These member’s expect to be able to access all the products and services a credit union offers electronically 24/7, 365 days a year with real time and immediate completion of the transaction. They want answer and they want it now!

Collectively, consolidations and evolved member expectations in the “e-banking” age are driving rapid-fire change in the financial services industry. To embrace and manage this change, credit unions must quickly adapt by increasing capital, reducing costs, become more efficient and attract and retain highly skilled management.

In Part 2 of our series, we will focus on how the Information Age has impacted banking and  help fuel members’ expectations to do banking on their time.

Rhiannon Stone

VP, Solutions Delivery

EPL, Inc.