By Ray Birch
ST. PETERSBURG, Fla.—As credit union membership growth slumps, one expert insists more CUs need to get back to their roots to reverse this negative trend.
And those roots are a singular focus, as opposed to trying to be everything to everyone, explained Brian Scott, chief growth officer at Velera.
“If you look over the last two or three years, credit union growth membership growth rates have really started to plummet,” said Scott.
Examining CU data at the close of 2024, Scott said if these market trends continue “credit unions will be down to less than 1% annual membership growth, approaching zero.”
Scott emphasized member growth is the fuel that fires credit union performance.
“You don't bring in more deposits and loans, and everything else, if you're not bringing in new members,” Scott said. “The really interesting part is if you look at credit unions $1 billion in assets and above, there are 443 of those. Those 443 are driving all of the growth for the entire credit union industry.”
The bottom 4,129 credit unions are actually growing at a negative rate, Scott said.
Age Demographic Shift
“That's obviously a concerning trend in credit unions,” he said. “There is also the age demographic shift among credit union members. There's only one age demographic where credit unions are growing, and that's among Baby Boomers.”
The share of credit union members who are Boomers has jumped in recent years from 20% to 39%.
“Every other age demographic has declined,” Scott said. “And Boomers, they’re not going to be around that long. Now, that's one of the problems.”
Boomers are also retiring, Scott pointed out.
“They're no longer going to be bringing in deposits. They're likely not taking out loans anymore. And the loans they do have, they're paying off,” he explained. “So, those sources of income for credit unions, if that's the only segment you're growing, you are really at risk.”
Brian Scott
Scott pointed out that Gen X membership at CUs has declined in recent years by 25% and Millennials have declined by 12.5%.
“Now, this isn't to say that credit unions aren't bringing in members from these age demographics, it's just that they're losing them faster than they're bringing them in,” Scott said. “As an industry, we have to be able to do things to retains these age segments.”
Specific Formula
What should CUs be doing?
“In my opinion there is a very specific formula for growth, and it comes in three pieces: Identifying your niche—knowing who it is exactly that you want to serve. Marketing to that niche, and then engaging that niche,” Scott said. “I know many credit unions—there are hundreds of examples—that are doing this well. For example, South Bay Credit Union in Redondo Beach, Calif. They identified a while back that one of the underserved markets in their community was cannabis banking. So, they've made that their niche.”
Since serving the cannabis industry the credit union, too, has grown significantly outside of the cannabis industry.
“By them focusing on that niche it's really fueled their overall growth,” Scott said. “It's amazing what happens when you move to focusing on a niche versus just saying, ‘We're going to be everything that everybody needs and we're going to serve a whole community.’ It's kind of like credit unions have gotten away from their original purpose, the original field of membership purpose, and have broadened their scope to compete with Chase, Citi, Wells Fargo, Bank of America…Let's face it, you can't compete with those banks. You're not going to outspend them. But if you focus on a specific niche…”
Scott also cited the work being done at Alliant Credit Union in Chicago.
“They are fully digital, have no branches. They deliver every product and service digitally and really have gone all in here,” Scott said. “All the money they would have spent on branches—maintaining them, staffing them—they've dedicated all those dollars to building out an exceptional digital experience.”
Really Serve The Underserved
Another example of a credit union being successful by picking a niche is TruMark Financial CU, located outside of Philadelphia.
“A lot of credit unions say they want to serve underserved, but TruMark has really gone all in. They've found where the financial deserts are,” Scott said.
Scott also believes credit unions need to spend more money on marketing.
“A lot of credit unions like to say they're the best-kept secret in their market and are proud of that. Well, they shouldn't be,” Scott said. “There's an NCUA statistic that shows from 2010 to 2020 that for every 1% of your assets that you spend on marketing, you get a 288% return in deposits. And it doesn't mean you must be good at marketing – it's just getting the word out. Credit unions are notoriously bad at tooting their own horns and really putting themselves out there.”
The last puzzle piece is engagement, Scott said.
“How do you truly engage with your members? My example here is Vibrant Credit Union outside of Moline, Ill. They went from 19 branches to now having coffee houses,” Scott explained. “You can't go into a Vibrant coffee house and conduct any financial services. You're truly engaging with their brand. You're having brand experiences because the coffee houses are called Vibrant. They're bringing in potential members to their coffee houses and engaging with them. The plan is to turn these people who stop in for coffee into members. So, when these coffee house customers want financial services, they've already engaged with the Vibrant brand.”