For credit unions, marketers, and consumers, 2020 has been a year of unknowns. The changes we’re witnessing will impact lending for years to come.

Here’s how current trends could shape the future landscape.

Strong deposit growth, weak loan growth

Annualizing the first two quarters of 2020, total median credit union deposits grew 21.8%. That’s 10 times higher than the median annual growth rate from 2017 to 2019.

Loan growth dropped 3.4% over that same time, leaving a sudden, sizeable shift in balance sheets, according to NCUA.

Many credit unions now have an even deeper need for loans. But in a market where qualified loan demand is on the decline, this is a challenge—especially on pandemic marketing budget.

Low rates drive mortgage refinancings

With the 30-year fixed mortgage rate at its lowest level since 1971, according to Freddie Mac, consumers are capitalizing.

Longer terms can also put more money back in consumers’ pockets to ride out hard times.

New players

New fintech challengers are accelerating in today’s digital transformation.

These newer competitors are savvier in the digital-first way of doing things that many credit unions have had to adopt in 2020.

Some predictions for 2021:

• Refinancing activity will drop by nearly half (46%), according to the Mortgage Bankers Association.

Rate shoppers looking to refinance have already done so, leaving consumers who aren’t paying attention to the rate environment. And if rates go up with a recovery next year, refinancing curtails.

• A slower recovery for credit cards and other consumer loans. Outside of a government injection of cash, growth should be steady but slower than recent years. Consumer and credit card lending won’t necessarily return at the same rate consumers pay off debt.

And the flip side of any stimulus would be a reduction in credit card debt, as is what happened in 2020.

• Qualified borrowers could be hard to come by. While demand for consumer loans should stay high, the quality may not be. There’s been a massive amount of job rotation with shutdowns this year — a trend that could continue through the pandemic’s end. That means job verification services will prove more crucial than ever to mitigate risk.

• Fintech lenders will attract more—and better—loans. Not only are fintech lenders increasing their market share, they’re moving up credit tiers and going mainstream.

As consumers go online first to find the best offers, marketplace lending is gaining in popularity and fintech lenders are consuming more of the loans that credit unions want and need.

How to stay ahead of these trends? Think transparency, flexibility, and peace of mind.

Now is the time to provide value that goes beyond a competitive rate. And if fewer new loans are available, give your best borrowers more reasons to deepen their relationship.

The fintechs are coming harder than ever, but they don’t own innovation. Now is the time to reevaluate your loan offerings before it’s too late.

GREG SCHULTZ is director, product management, for Kasasa, a CUNA Strategic Services alliance provider.

► Read more about strategy in 2021, sponsored by Origence.