Credit Unions Are Stronger Than Ever

Eliminating barriers and connecting with members distinguishes credit unions from other financial institutions and makes the movement stronger than it’s ever been.

 
 

“We’re stronger than we’ve ever been!”

That was the sentiment of a credit union chairman at a recent strategic planning session I facilitated. Was he referring to his credit union? All credit unions? The answer is both!

Credit unions are indeed having an outstanding 2017 — right on the heels of a very strong 2016 and 2015. At 4.3%, membership growth has hit its fastest rate ever. Credit unions added 4.5 million net new members over the 12 months ended June 30. That’s more than double the 2 million net new members added just four years ago.

New members bring more shares and loans. It should come as no surprise, then, that credit unions just posted the highest growth rate in the share portfolio since the Great Recession. And the loan portfolio is on pace to hit four consecutive years of double-digit growth, an unprecedented streak.

But an even better indicator of credit union success lies in the movement’s market impact.

Market Impact

The industry’s share of the U.S. auto finance market reached 18.9% through the first six months of 2017. That is the highest level recorded outside of the Great Recession, when the captive finance companies pulled back from the market. National market share for mortgage origination continues to trend up and hit a new mid-year record of 8.2%. And according to data from the Federal Reserve, credit unions achieved new market share highs for revolving and non-revolving debt, capturing 5.4% and 12.4%, respectively, of the market.

See how your mortgage portfolio stacks up to other credit unions, banks, and mortgage providers with MortgageAnalyzer. Learn more.

The best measures of success, and the focus of credit unions, are tied to member relationships. So, are members using credit union products and services more?

The answer is yes!

One out of five members hold an auto loan with their credit union, more than 17% use a credit union credit card, and nearly 57% have a checking account with their credit union. The usage of each of these products has increased measurably over the past five years, even as member growth has accelerated.

With higher product usage, it is not surprising to see members are saving and borrowing more at their credit union. The average loan balance has topped $8,300, and the average share balance is at $10,400 as of June 30, 2017 — both new highs. The combined average member relationship amount has grown 4.8% over the past year.

Connecting With The Community

Why are credit unions posting such strong results now?

News headlines touting the latest scandals coming out of the big banks help. The most recent admission from Wells Fargo is that the number of unauthorized deposit and credit card accounts opened by the bank’s employees now stands at 3.5 million — that’s a 67% increase from its initial estimate.

Although Wells Fargo has made changes to its board and management team, this has left a lasting black mark on a once-admired institution. It also has caused consumers to assess their own financial institution, leading many to credit unions.

But even before these headlines, credit unions were taking steps to distinguish their approach from other financial institutions. Sure, credit unions create value by offering competitive rates and fees, but many consumers are looking for value beyond financial benefits. They want an institution that is truly on their side. They want an authentic experience. They want a financial partner with whom they connect. Credit unions do all this, too.

As credit unions extend their reach into the communities they serve, they are connecting with members and consumers in creative ways. Many of these ways might not be revolutionary, yet they stand out in today’s financial services marketplace.

For example, one credit union follows the mantra of “we show up,” meaning it is present at every event that brings the community together. It is a simple, yet incredibly important, way of demonstrating engagement with what matters. Being visible and accessible to members and potential members creates a lasting impression.

But this is just one example.

Homebuying 101

Altra Federal Credit Union ($1.3B, Onalaska, WI) started “Home Buying After Hours” to kick-start its purchase mortgage business. The credit union believed there was an opportunity with first-time homebuyers who had stayed out of the market during the recession. After learning about the importance of education for this segment, Altra created an event that brings together all of the players in the homebuying process, including builders, realtors, title companies, and home inspectors. But rather than hosting a seminar, the credit union rents hotel space and creates a relaxed environment for personal interaction. It even serves beverages and hors d’oeuvres.

Leveraging local media, social media, and email marketing, Altra draws approximately 80 attendees for each event in its home market and generates more than 25 mortgages annually. The sessions provide an opportunity to not only help members better understand the homebuying process, but also connect them with the credit union’s mortgage lending staff. Altra staffers see the emotions that come with a home purchase and better understand their role in the process — which is not “just a job” but has a real impact on families’ lives.

As credit unions extend their reach into the communities they serve, they are connecting with members and consumers in creative ways. Many of these ways might not be revolutionary, yet they stand out in today’s financial services marketplace.

Jay Johnson, Partner, Callahan & Associates

A Voice In The Crowd

Looking to target teens and young adults who are just starting to engage with a financial institution, Community 1st ($613.8M, Ottumwa, IA) launched the “Your Voice” program. Your Voice has a dedicated microsite, www.c1styourvoice.com, managed by the program’s spokesperson, 28-year old Jessica Schindel.

More than just a spokesperson, Schindel provides insight into the needs of young adults and connects with them in their language via her blog. Your Voice focuses on financial education as a way to help younger members become smarter consumers. It offers first-time car and homebuyer programs with special criteria that acknowledges the limited credit history of this segment. Your Voice continues to evolve as Schindel and the credit union engage more with these members.

Hashtag Help

As Commonwealth Credit Union ($1.1B, Frankfort, KY) expands its geographic footprint, it wants to showcase its brand and culture in a way that emphasizes its personal touch. The credit union’s “#heykaren” campaign provided a direct link for consumers to engage with CEO Karen Harbin. Using social media and the hashtag #heykaren, members sent questions to Harbin regarding their financial needs.

The campaign set Commonwealth apart from competitors and generated thousands of questions. These questions presented an opportunity to connect directly with the community as well as offered real insight into the financial issues with which consumers struggle.

The success of #heykaren is leading Commonwealth to explore broader touchpoints for members. Its new campaign, called “Meet Your BFF,” personalizes an array of credit union staff members while underscoring the institution’s focus on relationships.

Understanding Member Needs

The goal of each of these efforts is to eliminate the barriers between consumer and credit union so the cooperative can more effectively connect with its members. Ultimately, this leads to a better understanding of member needs, which is why credit unions are consistently posting such strong results.

Engaging with members and then responding to their priorities is what cooperatives are all about. It is what distinguishes credit unions from their competitors. The result is that credit unions are indeed stronger than they’ve ever been.

 
2Q 2017

Strategy & Performance 2Q 2017

Credit unions are indeed having an outstanding 2017 — right on the heels of a very strong 2016 and 2015. Eliminating barriers and connecting with members distinguishes credit unions from other financial institutions and makes the movement stronger than it’s ever been. Learn what the industry's most successful credit unions are doing in this issue of Strategy & Performance.

Read More