Credit unions head into fall planning season with momentum in all key areas. Membership, loan, and share growth are all at or above the pace recorded one year ago, continuing a remarkable period for the industry. Since the Great Recession, credit unions are growing their balance sheet at more than double the rate of banks. And the balance sheet remains strong with solid capital, loss reserves, and asset quality.
As credit unions develop their plans for 2017 and beyond, they are focusing on how to continue the momentum the industry has gained since the recession. Opportunities abound in products, services, delivery channels, geographic areas, and SEG partnerships.
One of the key challenges management teams are wrestling with is determining how to take on new initiatives while still meeting the time and resource demands of existing business. How do they improve operations in current businesses while developing new ways to meet member needs?
Every credit union has areas in which it can improve the member experience. The key is to have a process in place that empowers staff to identify areas for improvement and a system to prioritize the items that will have the greatest impact.
Better Core And New Services
It is a classic management challenge that is particularly relevant for credit unions, given their growing membership base and evolving member profiles. As membership expands, especially into new geographic areas or through new SEGs, new member needs often arise. These could lead to new product lines or new methods of delivering products and services.
So how are credit unions tackling the challenge?
Sometimes it starts on a small scale with cross-functional teams that address specific issues. For example, some credit unions have launched teams that focus on improving the member experience across a range of activities. These efforts rely on cross-functional teams to bring a holistic perspective to the issue, from the front line to the back office. They address topics such as how to streamline new member account opening to make it faster and smoother or how to better handle information requests about a member issue across different departments in the organization.
TOTAL MEMBER AND ANNUAL GROWTH
FOR U.S. CREDIT UNIONS | DATA AS OF 06.30.16
© Callahan & Associates | www.creditunions.com
Source: Peer-to-Peer Analytics by Callahan & Associates.
Credit union membership increased at the fastest second quarter rate since 2000. New members often mean new member needs that lead to new product lines or new methods of delivering products and services.
Every credit union has areas in which it can improve the member experience. The key is to have a process in place that empowers staff to identify areas for improvement and a system to prioritize the items that will have the greatest impact. The teams can take it from there and should meet on a regular basis to check their progress on outstanding issues as well as discuss new items for their task list.
Another area in which smaller cross-functional teams can have an impact is in the development of self-service delivery options. Members are increasingly looking to online and mobile channels for more than basic transactions like checking balances or transferring funds. In response, credit unions are establishing teams guided by agile software development principles. These teams combine technical, operational, and management expertise to quickly evolve member self-service capabilities.
Some credit unions have used this approach to start addressing member service questions via electronic channels. For example, lost credit card or change of address notifications. Others are taking on bigger tasks, such as integrating loan application processes into electronic channels while re-thinking the steps so the online process is simple, intuitive, and seamless.
Regardless of the size of the task, speed is important. Being able to test and deploy solutions within weeks is a priority, as is learning from the member experience and adapting based on those learnings. Such an approach leverages credit unions’ ability to be nimble in responding to member needs.
Credit unions might not have the resources of Bank of America or Wells Fargo, but their smaller size gives them an advantage in both their insight and responsiveness to member needs.
Evolving Strategic Initiatives
Another challenge for management teams is how to move forward the key strategic initiatives that impact the credit union’s long-term success. The answer for some is to divide the business into “run” and “change.”
“Run” is the ongoing components of the business. This represents the fundamentals in which it is essential for the credit union to succeed. These might require a lot of attention now, but run items should require fewer management resources over time.
“Change” represents the items that will grow in importance to the credit union’s success over time. Change items might not be significant today, but they need dedicated time and resources, particularly from the leadership team, if the credit union is to fully realize its opportunity.
To ensure a focus on both segments, leadership teams are allocating time to each — starting by benchmarking where they are today. For many, it is surprising how little time they allocate to change, perhaps only 5-10%. But by measuring where they spend their time, they can begin to increase their allocation to the change side of the business.
Some credit unions have an objective of reaching 25% of their time to change items; others are shooting for one-third. Some believe it should be a 50/50 split.
The target number is not as important as the outcome, which is ensuring management spends a material portion of its day, week, or month on evolving the business for sustainable success.
A Time To Be Ambitious
With all this momentum, now is the time for credit unions to be ambitious and take on initiatives that will allow them to capture new opportunities.
Determining how to devote limited resources to new opportunities is a challenge, but investing in new ways to deliver value is a critical discipline and is essential to remain relevant to members.