Changing Member Makeup Should be a Red Flag for Credit Unions, CUNA Expert Warns

AUSTIN, Texas – Are credit unions equipped and ready to woo new types of members that will exist in a few years? Vickie, Joyal, CUNA vice president of research services, asked attendees this question at the recent 2005 Floyd Forum Leadership Conference here. Her topic, “The Evolving Credit Union Environment,” may have seemed more like a revolution to some of the credit union executives. She took them on a “whirlwind tour” of demographic and financial trends, from debit card use and online banking to fraud threats and bankruptcy reform. Joyal said the average age of adult members has increased from 40 to 47 during the past two decades, leaving behind their prime borrowing years from the ages of 25 to 44. In 2003, nearly 36 million people age 65 and over lived in the United States, just over 12% of the total population. The Baby Boomers, those born between 1946 and 1964, start turning 65 in 2011. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 71.5 million, nearly 20% of the total population. “Do we have the right mix of products and services?” Joyal asked. “Do we have the right facilities? Convenience may take a whole other form. Are employees trained to meet the needs of seniors?” She also noted the growing need to accommodate older workplace employees. “There are four generations in some workplaces,” Joyal said. “They care for children and parents. Flexibility will be key since many want to phase into retirement, to have eldercare, long-term care and health insurance. Only 8% of credit unions now have retiree health insurance.” On the opportunities side, the CUNA analyst emphasized the rapid growth of the Hispanic/Latino market, poised to grow by 75% in the next 25 years. By 2050, the Asian population will more than double to 9% of the U.S. population. But by 2025, there will be as many Hispanic/Latino Americans as seniors (age 65+), she said. “If you are looking for new, young members, look to Hispanic/Latinos,” Joyal said. “This `unbanked’ segment definitely needs financial services. They are taking money home and putting it under their mattresses!” Although non-Hispanic whites are still the group most likely to own their homes, “Home buying among immigrants will fuel increases in home ownership rates,” she suggested. “Offer a first-time homebuyers program or affordable mortgage program. They lack closing costs and down payments, which can be covered by many federal programs, but they can make the monthly payments. You will develop very loyal members, and default rates are not any higher…some say lower.” “And while 72% of the population age 18 to 29 would prefer to start their own business rather than work for someone else, 76% of the nonwhite population feel that way, compared to 57% of the overall population. Credit unions should consider offering small business services,” she added The conference, sponsored by John M. Floyd & Associates (JMFA) of Baytown, Texas, held two May sessions for credit union and banking executives. The 33-year-old financial services consulting firm is known in credit union land mostly for its overdraft privilege programs. -