WASHINGTON, DC -- Scott Patterson reaches back to a credit union icon to define the practical steps a credit union should take to ensure its existence in 2020.
“Ed Callahan used to say: ‘Follow the member,’” Patterson said, quoting the former NCUA Board Chairman and credit union executive.
For Patterson, president of Credit Union Student Choice, following the member means filling their evolving needs the next five years. And, as his firm works with credit unions in education finance, he sees parallels in his area of expertise and credit unions’ future. In education finance, he said, the need is significant, expected to grow, and results in an outcome “that can truly empower a member for a lifetime.”
“Credit unions that are learning about this important consumer loan category and connecting with college-educated millennials are not only growing and diversifying their loan portfolio, but also positioning themselves well for the future,” he said.
Overall, he sees most banks and credit unions stronger than several years ago and boasting healthy capital positions. “This will likely lead the big banks to focus on corporate services earnings, and less on consumer services due to newer regulatory environmental concerns -- and open the door for smaller banks and credit unions to focus on small business and consumer lending,” he said.
Patterson also expects non-traditional, non-bank technology “disruptors” which cater mainly to niche demographic areas, to likely continue gaining adoption (such as peer-to-peer lenders). “But, among consumers, trust is a component that is missing for many of these start-ups, he said. “Some of the players will succeed -- but members will still need, and want, the services of credit unions.”
That applies especially to those members in the Gen-Z and Millennial generations, he added. “I firmly believe that connecting with these demographics, and addressing their immediate financial needs, is incredibly important for credit union growth ambitions as these young adults mature in their post-college careers,” he said. “This is a huge population and they are the future of credit union membership.