WASHINGTON—CUs will thrive in 2020, predicts CUNA, thanks in large part to a growing positive reputation among consumers.
Bur the movement’s biggest challenge going forward is finding ways for the small institutions to survive the growing compliance burden, the trade association added.
“The number of banks declined over time and this is going to continue. The same thing can be observed at credit unions,” said Perc Pineda, senior economist. “Bank mergers, and credit union mergers, can be explained in many ways. However, of particular interest is the link between size and regulatory burden.”
Pineda said large institutions, particularly banks, can hire a “battalion” of experts to do regulatory compliance—which comes at the expense of customers—while small institutions cannot.
“The inability of small institutions to comply with increasing regulatory burden is unhealthy for the financial services industry, and the economy as a whole,” said Pineda. “Although credit union share of the total financial services asset is only 7%, they fit perfectly into the U.S. macro economy where competition is key to economic expansion. Low-cost financial intermediation, through credit unions, supports economic growth. Credit unions will continue to strengthen their position of serving the financial services needs of their members in the years ahead.”
A Difference-Maker
What will serve CUs well is their growing reputation for service excellence and increasing consumer awareness of their not-for-profit status.
“While, the public’s trust and confidence of the financial sector has deteriorated largely due to the 2008 financial crisis, consumer surveys, such as the University of Michigan’s confidence in financial institution survey, shows increasing consumer confidence in credit unions,” said Pineda. “Continued member service excellence – on all fronts – will position credit unions at the forefront of the economy’s financial services industry.”
Pineda is another who emphasized the need for CUs to focus on Millennials to bolster business, adding that technology plays a key role here.
“Credit unions can leverage technology, such as mobile banking, in offering faster service to its members,” said Pineda. “The number of credit unions offering mobile banking services, such as Apple Pay, has increased recently.”
At the heart of CUNA’s day to day operations is to ensure the success of credit unions in the economy’s financial landscape, emphasized Pineda.
“CUNA is taking the lead on a shared agenda of removing barriers that are limiting credit unions ability to serve their members; creating awareness about the credit union difference and value to consumers; and fostering credit union service excellence so that they can exceed their members’ expectations and needs,” said Pineda. “That means advocating for credit unions as America’s best financial partner and providing tools for our member credit unions that would help them navigate through issues and challenges—be it from interpreting shifting macroeconomic conditions, reducing regulatory burden, to enhancing marketing and operational efficiencies.”