ARLINGTON, Va.—Where will credit unions be in five years? CUToday.info is exploring that complicated question as part of a series we are calling Credit Unions 20/20. Below, NAFCU President and CEO Dan Berger offers his insights.
CUToday.info: Where will financial services be in five years, and where do you see credit unions fitting into that? In a stronger or weaker position?
Berger: In the next five years, the financial services industry will experience significant changes. And change will become even more rapid. Just look at what has occurred recently with the introduction of Apple Pay and other mobile payment systems. Many credit unions have been quick to embrace new technology, and continue to look at offering a more “frictionless” experience for their members when it comes to their online and mobile experiences.
Because of their Main Street presence and their not-for-profit, member-focused cooperative nature, credit unions are poised to be a critical player in financial services. By sticking to their core values, credit unions weathered the recent financial crisis successfully, and these values promise to be equally important in the future.
CUToday.info: What practical steps can a credit union take over the course of the next five years to ensure its position/viability in 2020?
Berger: For credit unions to stay competitive, adoption of new technology will be critical. It can allow the smallest credit union to seamlessly compete with the largest bank. In addition, credit unions must preserve their commitment to outstanding service that members have come to expect. Despite our society’s increasing reliance on technology, service will continue to be a defining factor for credit unions. If credit unions continue to focus on branding their trust-factor, invest in the technology necessary to compete and concentrate on growing membership, they will be positioned nicely for the future.
CUToday.info: In your view, what should a credit union be doing right now to prepare to compete in five years?
Berger: Innovationwill be key in all aspects of a credit union’s business. With the increasing pressure on margins, credit unions need to find more efficient ways to cut costs and leverage their business savvy.
Credit unions can also capitalize on digital platforms and social media to engage with current and prospective members. Essentially, credit unions need to be where their members are. This will help them cement relationships with current members and create new ones with prospective members. And in turn, cross-sell products and services their members need and want.
Additionally, credit unions should be more engaged in the political process. Too many decisions are being made in Washington that impact the financial services marketplace, and it is not enough to support the industry from the sidelines. To help mitigate possible negative fallout from current and future legislation, we need to have every credit union involved in the political process and reaching out to lawmakers.
CUToday.info: Looking at current trends and forecasts, which do you think are legitimate, and which are misleading/overblown in terms of the financial services market is headed, e.g, mobile, branches, distribution of income streams, etc.?
Berger: There has been much upheaval about attracting Millennials. A recent survey by Accenture shows that 72% of Millennials are actively using mobile banking, and 67% of them feel that the online experience that they receive from their banks is inadequate. Credit unions are uniquely positioned to provide value in the form of low fees and great service that Millennials are seeking. Because of their recent negative experience during the financial crisis, Millennials may actually be more attracted to credit unions and the values they represent than media reports have led us to believe. Credit unions must concentrate their branding on “trust.” Trust is the big differentiator between us and our banking competitors.
In terms of legitimate issues for the future, I think the importance of relationships and trust cannot be overstated in financial services. Fortunately, credit unions have long recognized the value of relationships and been great stewards of the trust their members place with them. This will serve them extremely well as the marketplace continues to evolve.
CUToday.info: How is your organization playing a role in helping CUs get to where they want to be in five years?
Berger: With the growing competitive forces on credit unions, NAFCU has committed to focus our energies on supporting credit unions in three specific key ways: through advocacy, education and compliance assistance. Each of these can have a profound impact on the fundamentals of credit unions and the financial services marketplace. We believe by focusing on these most significant needs, we will offer credit unions the foundation for success in their operations for years to come.