Credit unions regularly benchmark performance, rates, and product offerings against their peers and competitors in order to measure organizational strengths and determine strategic options. Beyond these market metrics, are credit unions also considering the impact of the regulatory environment on their strategy? The potential for taxation is often covered in planning session, but what about less obvious issues that could significantly alter a credit union’s business model?
Recent events raise new questions and highlight the importance of tracking the legislative and regulatory discussions.
- Ways & Means Committee hearings focused on credit unions’ ability to demonstrate their service to those of “modest means.” If tracking and reporting this data becomes a requirement for credit unions, what impact will it have on branch location selection, product development, and marketing strategies?
- How many credit unions will need to rethink their growth strategies given NCUA’s moratorium on applications for expansion into underserved areas?
- If a credit union offers tiered savings products, how would savings tiers be altered if deposit insurance limits are raised?
Other issues remain outstanding, such as the possibility of paying Unrelated Business Income Taxes (UBIT) on income from ATMs fees, insurance sales and other activities. Should this come to pass it could lead to a considerable shift in product and distribution strategies that are fundamental to credit union business plans and margins.
Ensuring that your credit union’s board and staff are aware of regulatory matters is an important step in the planning process. Taking appropriate action to help guide these issues to a favorable outcome is the next critical step. Examining competitive and economic forces is an essential part of strategic planning, but “non-market” influences can be just as powerful a force on credit union strategies.