What Are You Doing Next Year?
Credit unions' 10- and five-year plans have been whittled down to a short-term outlook in a pandemic-filled fog.
The 10-year plan has been whittled down to a five-year plan. Since 2020, that five-year plan was knocked down to a three-year vision and, in many cases, credit unions aren’t looking out much more than one year; even then, that’s just a short-term outlook in a pandemic-filled fog.
Many credit unions had some grand plans for the future before our world became covered in COVID.
For instance, Bill Partin, president/CEO of Sharonview Federal Credit Union in Indian Land, S.C. ($1.7 billion in assets, 99,630 members) had some big ideas for his credit union’s new 180,000-square-foot headquarters. As Partin put it, “We had built a gym. We had a lake with a trail around it. We created an oasis room with a ping-pong table, Dave & Buster shuffleboard, pool table, foosball, a couple of big flat-screen TVs and some couches. We built a state-of-the-art training facility – back when we thought in-person training was the gold standard.”
The new headquarters opened just days before COVID lockdowns happened in 2020. Once that occurred, “We literally had nine people working in 180,000 square feet,” Partin said.
Partin has been refreshingly open about his change of heart as it relates to a remote workforce and what the future might look like. He has talked about leasing out portions of the new headquarters and really listened to his employees’ concerns in regard to what work looks like going forward.
Talking with Partin (and I say this with a sincere tone – he loves to talk and I enjoy listening), I noticed he is open about recognizing the shifting sand that is planning and progressing into the future.
This got me thinking about the disruptors in so many areas of the credit union industry that weren’t a concern 20 months ago, and how these disruptors have upended our ability to create long-term plans as we once did.
As an example, the deaths of both David Bowie and Prince in 2016 was my own personal disruptor. At the time, I was finishing up a stint on the fringe of the music industry and their deaths were like a short-term disruptor to the music universe, as COVID has been a long-term disruptive bummer to everything.
The artists were such keystone elements of an entire industry that their non-existence changed how plans were made going forward. While sad, it was fascinating to experience how record labels, concert venues, promoters and tens of thousands of other people had to figure out new long-term plans to hopefully push their organizations that were so closely tied to the artists forward.
While returning to work may have seemed to be one of the bigger and ongoing challenges facing credit unions and executives, it appears that is only one small part of what our industry is facing in both short- and long-term planning strategies.
Vaccines have been readily available for months and that has helped relieve many short-term plans. Small children have been approved for vaccines and now booster shots are a thing. These progressions also help with a credit union’s ability to plan maybe a little more into the future. Maybe four months out?
Our COVID era has given rise to some potentially significant challenges to credit unions and how executives can plan for the future (whatever timeframe of “future” you want this to mean). From our observations, those challenges include cryptocurrency, supply chain issues, labor shortages and workforce changes.
Cryptocurrency
You know, that annoying word you kind of know enough about to have invested in a little over the past year, appears to have found its place in a disruptive world. The $3.5 billion UNIFY Financial Credit Union in Torrance, Calif., will become the first credit union to offer cryptocurrency trading for members to buy, sell and hold Bitcoin. As of this writing, the services haven’t been turned on, but they’re coming soon, according to its website. UNIFY partnered with digital banking giant Q2 and Bitcoin company New York Digital Investment Group for this venture. Why is this a future challenge? Credit unions can’t do something like this by themselves and must partner with a disruptive fintech to do it. Cryptocurrency is a gateway for the underserved and even the unbanked to get their foot in the door to some kind of financial stability, if not future financial independence once reserved for Wall Street types – and this is a good thing. This is already happening at banks around the world and the NCUA’s slow reaction to the issue has put credit unions in a go-it-alone situation.
The Supply Chain
This is one big thing we have no control over. COVID has infected production, manufacturing, shipping and inflation worldwide. That pain you’ve felt checking out at the grocery store, that jump in monthly rent costs or the incredible spike in the cost of a new or used car has been felt everywhere. Many members who have been on the financial edge are being priced out of existence. Credit unions will notice day-to-day expenses such as paper for their ATMs/ITMs go up more than 50%. The cost of your pens on a chain have already gone up. Why is this a future challenge? No one is sure how high these costs will go or for how long. President Joe Biden even said, “I don’t have a near-term answer” for bringing down the accelerating gas prices. Credit unions are faced with a budgeting unknown when it comes to the costs of simple everyday functions like heating branches during the winter.
Labor Shortages
Several credit unions have raised their minimum wage in the past few months to not only hold onto their existing, lower-wage-earning employees, but to entice people to apply for those vacant teller positions. Walmart, Starbucks and nearly every industry is experiencing a labor shortage and higher labor costs, which are cutting into profits. In a rare occurrence, Dominos even reported a fall in pizza sales due to a shortage of drivers. Why is this a future challenge? Like the supply chain problems, it is difficult to tell how high credit unions will have to go to retain and recruit their workforce.
Workforce Changes
“I need to see butts in seats!” That was the response given to me by one CEO as we walked out of GAC in 2020 after I asked about the possibility of having his employees work from home in those very early days of the pandemic. At that time, many countries in Europe and Asia had already shut down, but this CEO either wasn’t aware of what was coming or didn’t care. So many credit unions and credit union-servicing organizations have yet to return to the office/headquarters. Many are doing the hybrid approach of coming in two days a week and working from home the rest of the time.
Why is this a future challenge? Like Partin and his new headquarters, many credit unions are contemplating leasing out portions of their empty office spaces. Your credit union’s cost of owning or leasing your office space will climb and we don’t know how high that will go. The shutdown also changed the way employees think and feel about work. The mental strain most of us felt during the first year of the pandemic will remain with us going forward. For the first time in a long time, employees have much more of a say in what happens next.
How do you plan for that? Hell, how do you plan for anything?
Michael Ogden Editor-in-Chief mogden@cutimes.com