3 Strategies to Grow Your Credit Union

Credit unions are in a strong growth position in 2021. The NCUA reported 128.8% growth in net income for credit unions over the year in the second quarter, with shares and deposits rising $196 billion to a total of $1.58 trillion.

That doesn’t mean credit unions have it easy. Credit unions still have to find new and attractive ways to bring in new members, deliver stand-out financial products and boost our balance sheets. And many credit unions, especially the smaller ones, are stuck playing catch-up when it comes to technology investments; a recent report by CUNA listed technology as one of the six biggest challenges facing small credit unions today.

But overall, the time is ripe for credit unions to expand our offerings and grow our operations. After the pandemic, millions of Americans are eager to try new financial alternatives, and many of them are excited by the community-first model that sets credit unions apart.

Credit union leaders just need to implement the right strategies to leverage this moment. Here are three we’ve learned at PenFed that can make a difference:

1. Collaborate – Don’t Compete

It’s a story we’re all familiar with in the credit union community: Credit unions are the scrappy underdog taking the fight to the big banks. But does that story accurately describe the success of credit unions?

There’s no denying that credit unions represent a powerful alternative to traditional banking, and it’s important to highlight what makes credit unions unique. But when we choose to emphasize competition over collaboration, we can obscure what makes credit unions work best for the people we serve.

My point here is that credit union leaders don’t have to shrink the pie and wrestle away market share from the bankers; instead, we can focus on building collaborative relationships, both with other credit unions and with banks, in an effort to grow the entire industry. If we all grow together, that won’t just benefit us; it will benefit the people we want to help with great financial products.

2. Put Your Deposits to Work – and Embrace Fintech

Even though credit union assets are growing, that growth can come with some challenges. Deposits have a negative cost to carry; if you don’t have a good way to put them to work for you, they’ll hold you back and hurt your balance sheets. You have to both grow and utilize your deposits by turning them into assets.

There are two things you can do to ensure your deposits and your assets are working for your credit union. The first is to have a plan. At PenFed, we do a three-year rolling plan for how we want our balance sheet to look. That means we’re always looking three years ahead. In any given year, we’re enacting the next part of last year’s plan and connecting to the plan for the year to come.

You simply can’t pivot billions of dollars of assets overnight. Nor can you afford to be vague or unclear about what you want your teams to deliver each year. Investing more in the planning stage can go a long way.

The second thing is to embrace fintech. Credit unions have long lagged behind big banks on financial technology, but fintech can change that. Many fintech solutions are more efficient and cheaper to implement than the more centralized technology solutions popular at big banks. Building partnerships with fintech service platforms could give you a big leg up on accessing better capital markets and finding the right investment vehicles.

PenFed, for example, has partnered with the fintech platforms LoanStreet and Community Capital Technology to grow our loan participations business almost from scratch. Already, we’re loaning to 20 different credit unions.

3. Incentivize Your Employees to Love Work – and Give Your Members a Brand They Can Trust

You need people to want to do business with you. And while beneficial products with great rates will bring a lot of people in, you need more than that. You need a culture that people want to be a part of.

At the end of the day, brand and trust matter – not just for your members, but also for your employees. Employees need to feel like they are a part of something valuable, and members need to feel that they are seen, cared for and respected.

So, take stock of your credit union’s culture. Do you have a culture of communication, kindness and respect? Do you have a culture that gives people a reason to be happy about trusting you? If you don’t, a culture change should be a part of your strategy going forward.

Taken together, collaboration, better asset management and creating a good culture will help your credit union thrive in today’s environment.

James R. Schenck is president/CEO of the $27.6 billion, McLean, Va.-based PenFed Credit Union.