The economy is recovering and the worst appears to be behind us, but the world is still unsettled, NCUA Chairman Debbie Matz told conference attendees Monday.
“In times like these, people flock to institutions they trust—institutions that will be there for them through changing times,” she added.
Matz asked attendees to envision the year 2034—the centennial of the first federally chartered credit unions. What will the credit union industry look like?
Matz says it could be one of two pictures:
1. A credit union industry struggling to hold onto a shrinking share in a growing marketplace.
She compared this scenario with that of the Beta VCR. Beta may have been the best alternative to the VHS cassette, but it never became dominant in the market. Eventually both options became obsolete.
In this scenario, members pass their prime borrowing years and the next generation finds new ways to conduct financial business. Millions of young borrowers never see, or hear about, credit unions, and they shop for loans through online portals.
The credit union market share erodes, as does the number of credit unions.
2. A picture of credit union growth and strength: Americans agree that credit unions offer better products, better services. Young members believe credit unions provide efficient technological offerings.
The credit union industry embraces safe and sound business practices and smart, sensible, up-to-date business regulations.
Losses to the share insurance fund remain low and dividend growth increases, leading to satisfied members. As a result, membership grows well past one million, and assets exceed $1 trillion.
Matz encouraged credit unions to:
• Conduct basic due diligence. Make sure the loan originator’s underwriting is consistent with your own. Validate third parties with whom you do business.
• Make sure board members have the background, up-to-date training, and support they need to fulfill their duties.
• Undertake serious strategic planning to help assess where you want your credit union to be in five or 10 years and what it will take to get there.
• Adopt new technologies such as mobile banking and online bill payment, online loan application and approval, 24/7 service, and smartphone transactions.
Will your credit union be capable of serving the younger generation and future younger generations? Matz asked.
“Some things make our heads hurt to think about, but they are the very things we need to embrace.”