|Nov '16||Oct '16|
|# of CUs||6,028||6,063|
|Total Assets |
|Total Savings |
|Loans to Savings||80.2%||79.6%|
The new CUNA Environmental Scan Report addresses critical planning topics for boards and management teams.
Mobile payments, mobile malware, a lending rebound, and Generation Y awareness represent some of the major challenges and opportunities facing credit unions in the year ahead.
As your board and management team set strategy to guide your credit union forward, consider how these 10 trends from the 2013-2014 CUNA Environmental Scan Report might alter the course you set:
1. Mobile payments.
Mobile payments are growing by 68% annually—from $16 billion in 2010 to a projected $214 billion by 2015. Industry observers say this transaction type is both the single greatest opportunity—and threat—for credit unions.
This is a new ballgame. Members used to come to credit unions to get cash and credit union-branded checks or plastic cards. But members won't be coming to credit unions to get their mobile payment-branded devices. Mobile payments will be driven by access, not devices. The challenge will be to retain your members in a mobile payments world.
2. Mobile banking.
Consumers expect to access a variety of financial products and services from their mobile devices with ease and reliability.
About two billion smartphones will be active worldwide by the end of 2013, according to Deloitte.
Mobile banking has gone from cutting edge to mainstream faster than any other financial innovation. It's quickly becoming a basic expectation, especially among younger consumers. But there's a downside, and it involves Trend No. 3.
3. Mobile malware.
With the proliferation of smartphones and the explosion of downloadable applications, it was only a matter of time before malware started targeting mobile devices. That time has arrived. Trend Micro estimates the number of malicious Android apps will hit one million in 2013.
Your credit union must invest more in mobile malware detection and prevention to keep pace with increasing threats.
Educating members how to protect themselves from mobile malware also should be a priority.
4. A lending rebound.
Credit unions finally reported rising loan balances after three years of negligible growth. Lending will continue to pick up as the economy improves, consumer confidence rebounds, and household deleveraging declines. Economists expect credit union lending to increase 5.5% in 2013 and 6.5% in 2014.
Credit unions can expect growth in auto loans, credit cards, and purchase mortgages due to pent-up demand created by the recession. And a 3% to 5% increase in home prices during the next year should increase demand for second mortgages and home equity loans.
It's time for loan underwriters and loan officers to get out of a recessionary mind-set and think proactively about growing loan portfolios.
5. Meager earnings.
Credit union earnings will be meager. Earnings as measured by return on assets will fall to 0.75% in 2013 and 2014, from 0.84% in 2012. A 10 basis point (bp) decline in net interest margins will be partially offset by a five bp decline in loan loss provisions.
The Fed's low interest-rate policy will maintain downward pressure on credit union net interest income for the next two years. With asset yields falling faster than funding costs, interest margins will drop from 2.93% in 2012 to 2.8% in 2013—the lowest on record.
6. Unite for Good
The credit union movement has identified a strategic vision to help all credit unions achieve shared goals. It's a vision based on the shared values of collaboration, a member-centric focus, community involvement, and a dedication to consumers' fi-nancial well-being.
The shared vision is: Americans choose credit unions as their best financial partner. To achieve this, the credit union movement must embrace a strategic vision called "Unite for Good," following action steps you can find at uniteforgood.org.
7. The unbanked and underbanked.
Unbanked and underbanked consumers represent the last remaining "white space" in financial services—an uncharted territory where credit unions have a rare opportunity to serve an underserved market.
Approximately 68 million U.S. adults are either unbanked or underbanked. Revenue from serving unbanked and un-derbanked consumers totaled $78 billion in 2011 and $85 billion in 2012.
8. The growing compliance burden.
The compliance burden will only get heavier in the coming year. In fact, 2013 will be busier than 2012, due to the onslaught of Consumer Financial Protection Bureau (CFPB) mortgage rules. Your credit union should develop a compliance management system to address this overwhelming workload.
CUNA and the leagues offer helpful guidance on creating a compliance management system.
9. CEO succession planning.
CEO succession planning is becoming a priority as the economy recovers, retirement savings rebound, and more CEOs decide to retire.
If your credit union has a succession plan (and two-thirds do), it's time to review it to make sure it's still relevant.
Succession planning is more than replacement planning. It's a way to ensure the continuity of your credit union's performance and culture.
CEO succession planning requires proactive management. Determine the scope of your succession process, and then assemble the players and define their roles to begin rolling out your process.
10. Gen Y and low awareness levels.
How successfully credit unions attract the 100 million members of Generation Y will go a long way toward determining the movement's future viability. Fundamentally, credit unions must raise Gen Y's awareness levels.
New CUNA research shows that 45% of nonmembers ages 18 to 24 are "not at all familiar" with credit unions. Another 26% are "not very familiar" and 20% are "somewhat familiar." Only 8% are "very familiar."
To attract and retain Gen Y, credit unions need sophisticated mobile services and an effective social media strategy. They also need to clearly communicate their not-for-profit, cooperative business model.