Only 48% of credit union senior executives reported they are optimistic about 2019, down from the 77% who had a positive outlook for business in 2018 and 74% who were optimistic about business opportunities in 2017.

More than half (52%) of senior bank executives were optimistic for 2019, which was also down from the 68% who held an optimistic outlook in 2018 and 75% of senior bank executives who were positive about business prospects in 2017, according to the report.

Slowing loan growth, higher funding costs and concerns of early credit softening translated to some of the most fragile forward earnings projections in years, Steve Williams, Cornerstone Advisors president and co-founder, noted.

"The growing industry volatility is showing in the diminishing confidence banks and credit unions have in hitting earnings growth targets for 2019," he said.

Greg Gibson, CFO of the $2.4 billion Georgia's Own Credit Union in Atlanta, told Cornerstone Advisors why he is among the executives with a somewhat pessimistic outlook for 2019.

"Increasing probability of an economic slowdown in 2019-2020; significant increase in competition for deposits driving costs up; increasing competition in many lending sectors indicated by underpricing of credit risk," he said. "And exactly when is that regulatory relief going to show up???"

However, Laura Thompson, CIO of $1.6 billion Orange County's Credit Union in Santa Ana, Calif., explained to Cornerstone Advisors why she is in the optimistic camp.

"I am more optimistic about the industry because I feel that 2018 was a year for learning, ramping up and setting the foundation to move faster," she said. "I think that FIs know what they need to do to keep up, and now many are moving in that direction."

Ron Shevlin, Cornerstone Advisors research director who authored the study, highlighted three other conclusions of the study.

The first conclusion is that 50% of executives said growing deposits as their No. 1 concern for 2019, citing deposit displacement, or the diversion of funds from checking to alternative accounts, which will make deposit retention even more difficult.

The second one is that expanding digital presence continues as a priority for a growing number of credit unions and banks. Unfortunately, it seems to be coming at the expense of better marketing and sales capabilities, the report said.

And the third conclusion, credit union and bank executives give themselves improved ratings for future-readiness in 2019. But when artificial intelligence, machine learning and robotics process automation are not on the radar for a third to half of bank and credit union leaders, many executives may be deceiving themselves, according to the report.

Moreover, half of credit unions and banks said Fintech partnerships will be important in 2019, with digital account opening topping the functional list.

"Where will these institutions get the skills to vet and negotiate with potential partners?" Cornerstone Advisors Partner Terence Roche, asked. "If FIs' view of digital account opening doesn't include a hefty focus on digital marketing, contextual product offerings, data-driven campaigns and a very tight, easy fulfillment process, then it won't matter what investment they make. It won't work."