Last month, NCUA marked a technological milestone with the first-ever live stream of the agency’s open meeting.
During this historic open meeting, the NCUA Board unanimously approved a proposed rule and policy statement which increases the asset ceiling for “small entity” credit unions from $50 million to $100 million.
As a result, 77% of all federally insured credit unions (approximately 4,869 credit unions in total) may be eligible for future regulatory relief and other cost-free assistance from the NCUA Office of Small Credit Union Initiatives.
The NCUA Board decision has generated major interest, thanks in part to credit union news publications and industry associations. Journalists, lobbyists, and senior leaders are engaging in provocative debates about the impact of these changes, and some stakeholders are calling for additional increases to the $100 million small entity asset ceiling.
CUNA, for example, announced its position that “a much higher threshold of $500 million would be appropriate.”
As the debate on the small entity asset ceiling continues, one fact remains: the delineated market segment for small credit unions is expanding despite long-term industry consolidation.
Accordingly, small credit unions have an unprecedented opportunity to strategically capitalize on the increasing levels of support from NCUA and industry associations.
Innovation drives growth
While candidly acknowledging the current industry landscape, NCUA Chairman Debbie Matz recently said, “Small credit unions are essential to their communities, but many are struggling.”
Matz then cited “outdated technology” as one of the fundamental market forces that small credit unions need to overcome. In order to clear the hurdle of technology, senior leaders at small credit unions must be willing to invest in new solutions which drive organizational growth.
The Filene Research Institute confirms that “change is necessary for growth” in the November 2014 report, “Optimizing Channels Workshop.”
This report notes, “Credit unions must continue to position themselves for success as the financial services world is disrupted by technology. The payments environment is evolving. Consumers’ demands are diversifying. Digital channels are being embraced. Millennials are becoming the target consumers for many organizations.”
Digital channels—including online and mobile banking, mobile deposits and payments, mobile loan applications, and many others—are top-of-mind for millennials and other tech-savvy consumers.
Small credit unions with outdated technology cannot remain relevant without these innovative member services, which will eventually become gold standard offerings for all financial services firms.
New technology reduces cost and risk
When examining the potential impact and return on investment of new technology, chief financial officers are often pleasantly surprised. Best-in-class solutions typically reduce the cost of managing operations, marketing, data security, and risk and compliance.
At the same time, credit unions can rely on these solutions to increase productivity and efficiency by streamlining dataflow.
Modern technology can also empower small credit unions to grow loans, membership, and cross-selling profitability through loan targeting, refer-a-member incentives, and member service promotions that are automated and personalized based on readily available business intelligence.
These offers and incentives are cascaded and measured across all physical and digital channels, with responsiveness tracked through a centralized, real-time portal accessible by member-facing staff.
Small credit unions must embrace the new technology and services that members are demanding. By doing so, they will benefit from enhanced member relationships, increased operational efficiency, access to key data elements and superior intelligence, and lower costs.
The NCUA Board affirmed its commitment to the growth and prosperity of small credit unions during its recent open meeting. This powerful message was delivered farther and wider than ever before through the power of new technology—the live stream.
Following the NCUA Board’s lead, small credit unions should, in turn, affirm their commitment to the growth and prosperity of members by providing them with convenient, cost-effective, and state-of-the-art member services.