As the coronavirus (COVID-19) pandemic accelerates the move to digital channels, credit unions need to keep pace with the financial services industry’s largest institutions, says Chuck Fagan, president and CEO of PSCU, a CUNA associate business member at the premier level.
He offers insights into the top challenges facing credit unions and zeroes in on the competitive challenges facing all financial services providers.
CUNA News: What are the top issues and challenges facing credit unions?
Chuck Fagan: There’s still uncertainty about how long the pandemic will stick around at its current level.
We’re weighing the data and figuring out when we can get back to a normalized environment. We think we’ll see the economy and access to in-store retail open up in April or May.
We’ve zeroed in on 10 areas as we work with credit unions:
1. Forced digital modernization over the next three to five years. The pandemic accelerated this trend in a condensed time frame.
Credit unions need to keep their digital footprint strong because we don’t know what the branch will look like when we come out of this.
2. The role of branches. Digital channels will get the transactions while branches will facilitate life-changing events, such as buying a house and planning for retirement and education.
One of the primary drivers of new membership growth is the branch network. Digital channels will strengthen the new member process in an online environment.
3. Increased financial pressures. The effect of stimulus checks, unemployment, and what will happen with loan repayments is unknown.
A lot of CEOs feel good about where they wound up in 2020 and are hopeful we’ll be able to stay the same in 2021.
4. Increased emphasis on community. Credit unions' local and community focus will take on an extra emphasis. Credit unions have had a big impact on small businesses, their membership, and the community at large.
5. Increased importance of data. We've talked for a long time about member experience, and we’re at the stage where it's advancing into a personalized member experience. As we move more into this digital area, we need to know our members better.
Credit unions are losing member touch points as they shift to self-service, and we need to address that.
6. Increased consolidation. We've seen some healthy mergers between strong credit unions who’ll expand their footprint and scale in the future. We’ll probably see more of that.
7. Changing revenue channels. The downward trends with indirect lending will continue this year. Credit unions’ traditional strength in auto lending will give way to other new channels.
8. Greater focus on payments as a driver of noninterest income.
9. Openness to new technology. Credit unions need to make sure their technology footprint is strong and meets members where they want to be.
10. The changing workforce. We're all learning how efficient and effective we can be in a remote environment. How much of the workforce will return to work, how many will be remote, and can it be a hybrid model?
A bonus issue I’ll throw out: training and developing employees. Now is the time to double down on that.
An easy financial move is to pull back on training and developing your team, but that’s a short-term decision that will have ramifications down the road.
Tap into management programs and use this time to develop staff.
Credit Union Magazine’s Summer 2023 issue highlights the lending outlook for the rest of the year, how credit unions leverage fintech companies to boost digital lending, the power of lending partnerships, common Bank Secrecy Act violations, and the shift board members must make when becoming chair.
