As Buddha said, "Nothing is forever except change." Sometimes change can be anticipated from miles away. For instance, if your credit union's CEO announces his or her retirement months in advance, you'll have ample time to seek a quality replacement. Other times, it hits you over the head out of nowhere. Take the recent hit and run incident in Elko, Nev., which claimed the life of 58-year-old Doug Schwartz, president/CEO of the $147 million Elko FCU. That credit union faces the unexpected task of replacing its CEO – a reminder to credit unions of all sizes to implement a strong succession plan – in addition to dealing with the pain of such a tragic loss.
One change the credit union community can see in the distance is the growing threat of competition from nonbank financial services providers. By now, the community is well aware it has to innovate to avoid getting squashed by emerging competitors. And offering the same services as the competitor next door isn't going to cut it – you must strive to differentiate yourself.
At CUNA's America's Credit Union Conference in Seattle last month, during the session "Trending: Credit Unions in 2025," Filene Research Institute Research Director Ben Rogers revealed $11 billion in banking profits could shift to nonbank lenders in nine years, according to Goldman Sachs. He also predicted credit unions will continue to consolidate, declining at a rate of 150 to 250 a year, and small credit unions will continue to struggle for membership and asset growth. From 2007 to 2012 alone, credit unions with fewer than $100 million in assets lost six million members and $5 billion in assets, he said.
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Not surprisingly, from a consumer behavior standpoint, the future will also bring an even more mobile-first mentality, according to Rogers. Smartphones have already replaced computers as day-to-day portals for the internet, and by 2025, we'll be used to things like situation- and location-aware banking apps, which will offer financial advice to consumers based on their unique circumstance, and push out notifications based on where they are. New account authentication methods, such as snapping a selfie, will become the norm, as will the use of wearable technology for banking. Over the next 10 years, ATMs will be phased out, cash will begin to fade, and most payments will be made via mobile devices, Rogers predicted.
In other words, getting on top of your mobile game is a do-or-die situation for credit unions. When Filene asked credit union CEOs from across the country what is the one thing they would do right now to prepare for 2025, a top response was to establish mobile and data excellence. They also cited making the payment process as easy as possible and redesigning branches to be more tech driven.
That's one thing that won't change – the existence of branches. They're certainly changing, of course, as traditional teller lines get replaced with things like interactive kiosks and iPad-wielding employees roaming around to offer members one-on-one help. But they're not going away, and that's a great thing. Online-only, nonbank financial services providers might be convenient, but in our tech-driven, isolated culture where practically anything can be done through an app – from getting a date to ordering a pizza to summoning a glam squad to your door to do your makeup – face-to-face interaction is a novelty that's welcomed. When it comes to building brand loyalty among consumers, who are faced with more choices than ever before, treating them like living, breathing people with unique needs can go a long way. That could be the differentiator for credit unions as competition continues to grow.
Riding on the heels of the push for innovation and mobile technology is a continued necessity to adapt to younger generations' needs. Credit unions have always struggled to attract young members, and it appears their struggle hasn't gotten any easier in recent years. Back in 2011 and 2012, before the term millennial went mainstream, I wrote a monthly column for CU Times titled "Gen Y Back Talk," in which I strategized ways for credit unions to win more Gen Y members, given the average age of a member was in the late 40s. Four years later at ACUC, CUNA announced it would roll out a new campaign to spread awareness about credit unions to consumers, especially young ones. In its presentation, CUNA said 40% of millennials don't know anyone can join a credit union, half of millennials (25 million people) can't identify credit unions as financial institution, and 70% don't even know what a credit union is.
I'm a millennial (an old one at that – I got my first cell phone, one of those Nokia bricks, at the very end of high school and Facebook wasn't even invented until my senior year of college), and this news came as a bit of a shock. But as someone who has worked in the credit union industry for four years, and a former GAC Crasher who has seen enthusiasm for the movement among young people first-hand, I'm likely living in a bubble. Will credit unions still be struggling to attract members of the youngest generation (whatever it may be called) in 2025? CUNA's data are a case in point that while new challenges will always emerge, others remain and still need to be tackled. It should give credit unions a big nudge to make adapting to young consumers' needs part of their long-term strategy.
As tempting as it may be to stay wrapped in a cozy cocoon doing things the way you always have been, embracing change is credit unions' only chance for survival.
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Natasha Chilingerian
Natasha Chilingerian has been immersed in the credit union industry for over a decade. She first joined CU Times in 2011 as a freelance writer, and following a two-year hiatus from 2013-2015, during which time she served as a communications specialist for Xceed Financial Credit Union (now Kinecta Federal Credit Union), she re-joined the CU Times team full-time as managing editor. She was promoted to executive editor in 2019. In the earlier days of her career, Chilingerian focused on news and lifestyle journalism, serving as a writer and editor for numerous regional publications in Oregon, Louisiana, South Carolina and the San Francisco Bay Area. In addition, she holds experience in marketing copywriting for companies in the finance and technology space. At CU Times, she covers People and Community news, cybersecurity, fintech partnerships, marketing, workplace culture, leadership, DEI, branch strategies, digital banking and more. She currently works remotely and splits her time between Southern California and Portland, Ore.
