(Note: This is Part I in a three-part series.)
It’s dangerous to be complacent and to simply assume credit unions will thrive for decades to come. Very real threats exist to the credit union business model in its current form.
We examine those threats in this first part of our three-part series. We’ll also look at potential actions industry leaders are considering to keep the credit union business model viable.
What does it mean for a system to be “built to last” or “sustainable”? One definition: “The ability to continue a defined behavior indefinitely.” Another definition seems especially relevant to credit union sustainability: “A sustainable system or process must be based on resources that will not be exhausted over a reasonable period.”
If you take the latter definition and substitute the word “capital” for “resources,” the definition becomes especially relevant to credit unions: “A sustainable system or process must be based on [capital] that will not be exhausted over a reasonable period.”
In this three-part series, we’ll attempt to answer these questions:
Key macroeconomic trends
Most experts agree the financial shocks to the global economic system during the past three years have been the most severe since the Great Depression. But what happens next?
|John Lass examines the sustainability of the current CU business model. Watch now.|
Leaders from every business sector are trying to determine whether the severity of the shock will result in permanently altered behaviors by consumers, businesses, and governments, or if life will eventually return to “normal.” Some talk about “a new normal,” but no one seems to know exactly what that means.
Economists, industry observers, and consumers have focused too much on the word “normal” and not enough on “new,” suggest Bill Gross and Mohammed El-Arian, co-founders of the global investment management firm PIMCO. They imply we might be in for some major and lasting changes, meaning that the new order might be very different from the recent past.
Several economic trends in place for the past generation might not be sustainable.
Next: Consumer savings and debt