In today’s dynamic economic environment, credit unions continue to face regulatory challenges and competition from challengers as well as big banks with big pocketbooks. The industry actually experienced a membership decline last year. In order to thrive in this environment, credit unions must take a proactive approach to growth and seek new opportunities to expand.
Let’s explore 4 ways to take your credit union to the next level while providing excellent service to your members:
- Prioritize Strategy –Prioritizing your strategic options helps a credit union achieve its goals. The best way to make sure you are moving in the right direction is to take a step back from the idea list and begin with your credit union’s vision. Without a clear vision you could end up pursuing options that actually drag you in an opposite direction. Try bringing objectivity into your decision-making process by comparing your options and benchmarking them against criteria. Making a decision without the proper information can be a big mistake as you could waste valuable resources, time and or dollars. Conduct research to validate (or invalidate) your assumptions. One of the best sources of information about the marketplace is your members. Try identifying the unmet needs of future members. How can you get deeper with current members? It may even be as simple as conducting a survey. It is important to focus on the best interests of the members and key stakeholders.
- Consider Fintech Partnerships –Although fintechs can indeed create new challenges by disrupting the traditional financial institution model, it also opens up many growth opportunities for credit unions. With a partnership, you eliminate some of the risk of building your own solutions while still delivering value to members. Since digital platforms are constantly evolving, Fintechs can help credit unions access new delivery channels and enhance their technology capabilities. LenderClose is an interesting example, they bring technology into the relationship-based credit union industry that simplifies the lending process. They help credit unions capture members and business by offering a state-of-the-art solution.
- Focus on Financial Well-Being –Credit unions hold a unique advantage due to their collaborative nature and focus on service. Providing financial literacy and education through life changes has long been one of the key attributes that set credit unions apart. Credit unions always go the extra mile to educate their members; many run financial literacy workshops to help their members. Credit unions should also explore options with tech-savvy organizations for the creation of holistic financial planning apps for millennials and Gen Z. Finance themed mobile games and ‘tools’ can be game-changers. If credit unions can continue to provide valuable learning programs to its current and future members (Gen Z) and help them create a budget and then incent them to stick with their budget, they will continue to be rewarded with member loyalty.
- Strategic M&A –Mergers and acquisitions are important tools that can generate non-interest income and allow credit unions to create unique value for their members. We have already discussed the option of fintech partnerships. But there are various external growth options that a credit union can explore. Minority investment, majority investment, joint ventures and licensing agreements are a few of the options. The right acquisition or partnership can swiftly help your credit union or CUSO meet the changing needs of your members and drive long-term growth and sustainability.
Through Fintech Partnerships, strategic M&A, and other forms of collaboration, credit unions today can find innovative ways to adapt to and flourish in today’s evolving marketplace.
This post was originally published by John Dearing (Partner, Capstone) on CUInsight.