Credit Unions Step Toward Their Members

Credit unions are deploying innovative ways to expand their footprint – both physically and virtually.

 
 

Nearly the entire credit union industry faced earnings pressures throughout 2009 and 2010 due to a combination of corporate credit union write-downs, NCUSIF and TCCUSF assessments, increased credit losses, and a record-low interest rate environment. Yet credit unions have largely maintained their existing physical delivery networks.

From June 2010 to June 2011, investments in land, buildings, and other fixed assets increased by 1.7% to $20.6 billion. And although the total number of credit unions decreased by 214 during that same period, the number of branches decreased by only 18.

Some credit unions are deploying innovative strategies to expand their footprint. In addition to acquiring new locations from banks and other credit unions, several credit unions are also absorbing the loan and deposit relationships associated with those branch locations. These acquisitions, such as Alaska USA Federal Credit Union’s ($4.4B, Anchorage, AK)  purchase of five branches from Arrowhead Credit Union ($660.2M, San Bernadino, CA), are keeping members and assets in the credit union industry and helping institutions re-focus on core relationships and financials.

Other credit unions are bringing new members into the network by purchasing bank branches, such as Royal Credit Union ($1.2B, Eau Claire, WI) which purchased $177 million in deposits, real estate loans, and other assets from Wisconsin-based Anchor Bank.

For members looking beyond the physical branch, credit unions are also expanding their virtual delivery networks. Nearly 1,000 credit unions offer mobile banking through mobile websites, Short Messaging Service (SMS), or dedicated smartphone applications. Deployment has increased dramatically in just a year with more than half of all credit unions larger than $500 million in assets offering their members on-the-go access to their banking information. The number of mid-sized credit unions – those $50 million to $100 million in assets – that offer mobile banking nearly doubled between June 2010 and June 2011.

Mobile Banking Deployment By Peer Group
For All U.S. Credit Unions | Data as of June 30, 2011
Callahan & Associates' Mobile Bank Deployment By Peer Group
Source: Callahan & Associates' 2011 and 2012 Credit Union Directory.
Leaders In Online Banking Adoption
For Credit Unions over $20M in Assets | Data as of June 30, 2011
Rk
Credit Union
St Online Banking Penetration Rate
Members Using Online Banking
Total Members
Total Assets
1
REALTORS
MD 100.00% 6,916 6,916 $85,432,684
2
PALMETTO HEALTH
SC 98.01% 11,738 11,976 $52,934,994
3
IDAHO STATE UNIVERSITY
ID 96.72% 14,517 15,010 $113,655,843
4
CUTTING EDGE
OR 94.63% 3,489 3,687 $37,343,543
5
IDB-IIC
DC 93.05% 8,084 8,688 $388,569,119
6
SPIRIT OF ALASKA
AK 92.62% 9,198 9,931 $123,755,521
7
NATIONAL 1ST
CA 91.83% 12,774 13,911 $188,192,431
8
FAIRFAX COUNTY
VA 91.54% 14,919 16,297 $238,717,061
9
KEMBA CHARLESTON
WV 91.30% 4,207 4,608 $36,805,206
10
A.C.P.E.
WY 90.19% 3,878 4,300 $38,407,087

Nearly one-quarter of credit unions with $500 million to $1 billion in assets and one-third of credit unions with more than $1 billion in assets offer remote deposit capture, giving members the convenience of depositing a check from anywhere in the world. The next major step that is already live at credit unions of all sizes is mobile remote deposit. This technology allows members to use their smartphone to make deposits while on-the-go.

Mobile banking was the most frequently identified area of investment for 2012, according to Callahan & Associates’ 2012 Technology Spending Priorities survey. The survey, published in the 3Q 2011 edition of Technology@CU, shows that between 20% and 32% of respondents indicated they were making a significant investment in some version of mobile banking. This was true for both credit unions that do not yet offer mobile banking and credit unions that already offered it, indicating that first generation mobile banking should give way to more advanced offerings during the year.

New Services Planned For 2012
Callahan & Associates' New Services Planned For 2012
Source: Callahan & Associates' 3Q 2011 Technology@CU.
Significant Upgrades Or Enhancements Planned For 2012 For Existing Technologies
Callahan & Associates' Significant Upgrades Or Enhancements Planned In 2012
Source: Callahan & Associates' 3Q 2011 Technology@CU.