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Tag: member growth (Page 1 of 2)

Are 80% of Credit Unions in Trouble?

Originally published in CUInsight.com

This was going to be an article about holiday cheer and Christmas music. The first paragraph would be asking you when you first heard that holiday song this year. And then there would be a section on how holidays seem to be starting up earlier in 2020.

Which is totally fine, because if there was ever a year we needed some extra cheer…well, yeah.

Instead, a coworker (ok, my dad) shared a recent Credit Union Times article about the performance of the industry, separated by segments. He noticed they are now calling all institutions smaller than $1B in asset size “small”.

$1B Is Small?

Kids Shoe
Small for an adult shoe or huge for a kid’s shoe?

Are you from a $750M asset size credit union? Do you feel small? Because now you are. Join 4,875 others that fall under that classification. Not to mention you make up 92.3% of all credit unions.

Doesn’t that seem, odd, to you? It did to us as well. So I started digging into the numbers. Spreadsheets, here we come! Don’t worry, you’ll only get the highlights. I’m not subjecting you to more columns and rows than you already have at work!

Feel free to check my data using the publicly-available 5300 call reports. I’d love to be wrong in this. You’ll see why soon.

It’s Good to Be King

Lion
It was either Mufasa or Mel Brooks.

First, let’s take a look at the top of the top…our $4B+ credit unions. There are 70 of them as of December 2020. Here’s their big stats:

  • $705B in total assets (industry as a whole has $1.81T, or $1810B for consistent decimal points)
  • 42.7 million members out of a total 125.1 million (34% in 1% of CUs)
  • 18.2% average asset growth (17.6% median growth)
  • 5.7% average member growth (5% median growth)

In addition to those positive numbers, none posted any losses. Overall, big credit unions are doing great! It is a testament to the hard work of thousands of credit union employees. Congratulations on helping serve millions of Americans through a not-for-profit financial cooperative.

So I’d assume if the top is doing so well, everyone else must be, too! “A rising tide raises all ships” is a phrase heard often in our industry. And I love seeing the cooperation between institutions.

I mean, there are hard-working and dedicated people at credit unions of every size, whether “small” or actually just a few thousand members strong! Good things for all, right?

“Small” Credit Unions Doing Well

Sapling Growing Out of Dirt
Growth is great!

You can check out some of their data in the aforementioned article. In general, the numbers look positive. But remember, that’s counting all credit unions under $1T asset size in one pot. A bit crowded, don’t you think?

Plus, it’s important to have some social distancing.

I wanted to dig deeper, and not into that group, but one which you’re more familiar.

And, it was time to put that one statistics class I took to good use. Besides, it wouldn’t be the first time I highlighted how you can make stats say almost anything.

A Different Picture <$250M

Fingers Holding Tiny Dollar Bill
Are you getting the full dollar, ahem, story?

I remember not long ago when “small” credit unions were considered those with an asset size below $250M. Even today, you make up 4230 of 5,244 institutions. That’s 86.8% of the total!

In speaking with some of you, I’ve learned that you serve members whom the larger ones cannot. You fulfill a need for financial services in our country that no one else does. Thus, you’re important!

Here are some of your numbers:

  • $210.6B assets (11.6% of total CUs)
  • 19.6 million members total (15.7% of total)
  • 11.2% average asset growth (10.9% median)
  • 8.75% average member growth

Despite making up a small portion financially, and even numerically, you’re doing well. Asset growth is strong, whether we use average or median. In case you’re wondering, I used median to eliminate the effects of “extreme outliers”.

Essentially, using both gives us confidence that the numbers we see are representative of the group.

“But, Joe, you forgot to include the median for average member growth!”

Great catch. I was saving it for right now! Because something really interesting happened when I ran this value. In fact, I even did it a few times to make sure I hadn’t messed up.

For credit unions with a $250M or less asset size, median member growth is currently -0.92%. Yes, negative! Small credit unions are, in general, losing members.

“But the average was up so much!”

True. I looked at the data and some credit unions post 40% or higher member growth (and some with similar swings downward). Since they only have a few thousand members, it takes less to create large swings. Hence why I checked the median as well.

Deeper Still and More Concerns

Scuba Diver and Rocks
Let’s bring some light to that darker dive.

That made me want to see if the member loss was more prominent on one side of the group or another. Sadly, it was. I looked at the 2811 credit unions with <$50M asset size, composing 53.6% of the total. Their average member growth is 13%. Hooray! But…

Their median member growth is -1.3%. Nearly .4% lower than the larger segment. 

So why are the numbers so divergent?  PPP loans could have had something to do with the success of large credit unions, but not likely the member growth numbers.

Sure, they proportionally did more PPP lending, providing part of that boost. Truly smaller credit unions didn’t have an opportunity to provide as much of this assistance.

I recall hearing about how difficult the processes were. If you were filing them manually, you were getting fewer done, and that’s even with the enormous amount of time and energy you put into it!

At the end of the day, large credit unions benefited and smaller ones, as a whole, did not.

Though that alone shouldn’t explain the disparity.

With Your Data, You Can Act

Group of People at Table with Notes and Laptop
Make your plans with the best information.

I’m not here to ponder the reasons. You have a whole bunch of really smart people ready to dive into analysis. Sometimes I’m one of them, but not today. As I said above, this was just to share the data.

I believe it’s essential to have good information before you make any plan or take action. It’s why our company runs an unbiased and honest Learning Library, filled with insights and guidance for a range of products and services.

So seeing an article that puts a $900M credit union in the same group as one which has 4,000 members forced me to take action. You know you have different challenges and strategies for growth (or survival). Addressing you together isn’t helpful.

So, are 80% of Credit Unions in Trouble?

Caution Cone on Keyboard

That’s not a question I can answer. And yes, I may have triggered Betteridge’s law of headlines, though I really don’t know if it’s definitely a “no”.

There are definitely concerns which you may not always get to see. If viewed widely, this article likely won’t make me many friends in high credit union industry positions. It points out some concerns about a large portion of credit unions that many would not like promoted.

But data doesn’t exist to make you happy, sad, satisfied, or frustrated. It exists to be processed, so you can act on it. And you know what? I hope I’m wrong in my analysis. That I made some silly mistake.

Take a look at your own data. Does it line up with what I shared? Regardless, learn from it and take appropriate actions.

Because everyone deserves the best information so they can make decisions which benefit their credit unions, communities, and the members they serve. Isn’t that what the credit union movement is all about?

And in case you haven’t heard it a thousand times already…”I don’t want a lot for Christmas…”

Holiday Candle and Pinecones

Happy holidays to all!

The 3 Challenges Any Effort Must Overcome

This post began as I considered technologies emerging within the financial space. From chatbots to mobile app improvements, I don’t have to explain all the emerging…stuff.

We were going to have a nice chat about how people of different generations, careers, technological comfort, and more may react to all of it.

That’s fine. But it’s not for today.

It’s About You

I cast too small a net. I missed the point. The topic of this post isn’t about technology. It’s about you. Not you the humble, beautiful, and giving person reading right now. You the credit union. You the dentist. You the grocery store.

Where am I going with this? What I’m about to say is going to sound so simple that you’ll want to laugh in my face. Then you will realize it’s been in your head all along. As it has every one else.

3 Challenges

There are three challenges you must overcome in order to get someone to change their behavior. That could mean using your mobile platform. Or flossing. Or even just grasping that you exist as an entity. Those three challenges are as follows:

  • Don’t know
  • Don’t care
  • Don’t want to

Don’t Know

If you’re trying to attract new members, you have to overcome each of these challenges, in order, before they’ll make the switch.

First, it’s possible they don’t know you exist. How can you solve such a massive problem? Marketing? Word-of-mouth campaigns? That’s up to you.

Then, there has to be a reason for them to pay attention. Why care about opening a relationship with your credit union? Lower fees or interest rates are fine, yet when talking credit cards, security is the first priority for switching.

Help members by ensuring they know you exist.

Don’t Care

After putting all this glorious energy into reaching out, informing, addressing their pains, and making it easy to get started, there’s still another obstacle. Even after acknowledging their current strategy might not be ideal, they just don’t want to make a change.

I know people who refuse to use online banking (they’ll never go mobile). To them, it’s a security nightmare and just isn’t worth anything it can offer them. These people don’t care about what you are offering.

Help members by giving them something to care about.

Don’t Want To

You’re not going to attract everyone, no matter what you do. That’s why my readership is only 84% of the credit union industry (I’m estimating on the fly…probably close, right?) and not all of it. And that’s ok.

Though I still need to ensure more people know about my blog (and speaking), then give them a reason to care. Those who don’t want to care, well, that’s their choice. I’m still happy to extend honorary geek status to them at any time.

Help members by showing why they will want to grow the relationship with your organization.

TL;DR

(Too Long, Didn’t Read)

Everything you do has to overcome three challenges to succeed:

  1. Knowing.
  2. Caring.
  3. Wanting.

If you miss one, said thing won’t be a success.

How do you seek to overcome these Big 3?

A Mission You Can Bank On

Originally published on CUInsight.com

A recent post, Giving Back Has ROI, Too, linked your charitable efforts with your growth strategy. You can do the most for all parties when your “good” aligns with your mission. It keeps everyone more engaged, provides the best opportunities for cross-promotion, and clearly defines your purpose in the community.

Already well-aligned with the areas of community you support? That’s great! You can go even further.

Your product lineup is boring. It’s the same as every other credit union and bank. Checking, savings, lending, and maybe investments. On their own, these provide no differentiation or excitement. However, what if you designed these offerings to directly benefit those you help? A successful strategy can help gain new (profitable) members while making a difference beyond contributions.

A previous post dove into this concept with two interviews. One was of a credit union in California, CCCU. The other, Vancity, out of Canada. Both integrated their giving into their products. The former supported local students with scholarships, using funding from interchange fees. The latter donated a portion of their profits from their credit cards. Both times, members have a direct hand in the positive impacts of their credit union. In fact, if not for the members’ actions, these contributions would never have occurred.

Here’s another way to integrate closely with your core mission. A credit union local to me, Grow Financial, uses a leaf as their logo. This was not a random choice by the board. It was selected for two reasons (of which I’ve learned). The first you’d expect: I want my money somewhere it can “Grow”, and leaves are a tangible symbol of growth. The second is for their environmental focus. Grow’s headquarters is LEED certified (uses less resources to run, built with local materials, maintains high indoor air quality, etc.). They support environmental charities. Being “green” is who they are.

How about you? What’s your raison d’etre? Now it’s time to brainstorm how you can merge that into your “boring” banking solutions. Maybe that means working with one in your community (or a variety if serving large areas). Maybe that means starting your own! Besides making a positive impact, it can rally existing members and attract new ones!

Image credit: http://globe-views.com/dreams/charity.html

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