Although lending will continue to be a struggle, credit union loan balances are on the uptick, according to CUNA’s newly released 2012-2013 Credit Union Environmental Scan. Allowances for loan losses should decrease as lending demand picks up and credit quality improves.
The second of this two-part series outlines five more topics credit unions should address in their strategic planning: lending, governance, membership growth, technology, and compliance.
Monitor the implications of these issues, and develop strategies to address them in the coming year.
Lending will continue to be a struggle, and interest-rate competition will be intense. But after three years of essentially no loan growth, credit union loan balances should increase 4% in 2012 and 6% in 2013.
Auto loans, credit card loans, and purchase mortgages will be strong growth areas in the upcoming year. While mortgage refinancing activity might be exhausted, rising longer-term rates should entice first-time home buyers off the sidelines.
Be sure your credit union has a strategy for lending to credit-impaired members. Following the recession, many members will have “bruised” credit histories—but this doesn’t necessarily mean they’re poor credit risks.
Trusted Strategic Planning Resources
Although budgets are tight, forcing tough spending decisions, strategic planning is not the place to take short-cuts—the future of your credit union depends on it.
Gain all the resources you need with the Credit Union Environmental Scan (E-Scan) — the trusted resources for credit union strategic planning for more than 25 years.
E-Scan Report: Purchase a copy for all board members and senior management so everyone comes prepared and focused.
PowerPoint Presentation: Prepare detailed PowerPoint presentations by selecting from over 100 slides filled with content and graphs from the E-Scan Report.
DVD: Use this fast-moving 35-minute overview to present the insights of the E-Scan Report in a concise way that is sure to stimulate discussion.
E-Scan Newsletter: Receive strategic updates each month! Stay up-to-date on industry developments and trends by subscribing to this newsletter.
Visit our E-Scan website for more information.
As your business model changes, so must your governance model. The traditional governance blueprint many boards have followed in the past is no longer adequate for moving your credit union forward.
Innovative boards need a bolder approach to meet future challenges. Establish a culture of dedication on your board.
Dedicated boards set themselves apart with their readiness to participate, contribute, and improve.
Start a program to recruit future directors. New board members offer a fresh perspective on membership growth, and on products and services for your credit union to consider.
More than 21 million nonmembers younger than age 18 currently live in members’ homes—your members’ children. Offer adult members incentives for signing up their children for credit union membership.
Your credit union also must attract members of Generations X and Y to ensure future loan growth. Gen Yers’ earnings are expected to exceed boomers’ income by about $500 billion within eight years.
Ride the wave of antibank sentiment and explain your not-for-profit business model to younger consumers. Once these younger consumers understand the differences between banks and credit unions, they’re far more likely to choose credit unions.
Work with minority communities to attract younger members. The average age of the Hispanic population, for example, is more than 10 years younger than non-Hispanics.
Use a member-centric approach when developing your technology strategy. Start with the desired member experience and work back toward the appropriate technology.
With decreased loan demand and increased pressure on earnings, your information technology team must watch expenses carefully. Using technology to achieve greater efficiencies was listed as the top priority among credit union CEOs surveyed by Abound Resources Inc., a CUNA Strategic Services alliance provider.
Rely on your credit union’s wealth of data when creating your business intelligence strategies. Specifically, your credit union needs a data warehouse for integrating, analyzing, and displaying data; people with analytical minds asking the right questions; and thorough integration with internal processes.
Your credit union needs a comprehensive compliance strategy to keep up with regulatory changes from multiple state and federal agencies. Without one, it’s easy to fall out of compliance and threaten your credit union’s safety and soundness.
The Consumer Financial Protection Bureau is busy setting up systems for comments and complaints on all consumer financial products and services.
Anticipate regulatory changes as best you can while staying focused on your biggest asset—your members.
CUNA: 2012-2013 Credit Union Environmental Scan: 100-page report, DVD, PowerPoint, Strategic Planning Guide, and monthly newsletter.