MADISON, Wis. –The large will get larger.
Credit unions have been a tale of two movements over the past decade, with the largest credit unions dominating industry growth metrics in membership and lending.
That isn’t going to change, according to David Polet, director of voice of customer research at CUNA Mutual Group, who suggested that credit unions will be at the forefront of a new frontier of challenges and opportunities that will shape the face of the credit union movement for decades to come.
“Large credit unions are the growth engine of the credit union movement,” Polet said during CUNA Mutual’s online Discovery Conference. “It is among these credit unions that we see growth in the number of credit unions, membership and loans.”
The 7% Hold 70%
Polet defined large credit unions to be any credit union with more than $500 million in assets. These large credit unions hold more than 70% of assets and total loans in the credit union system, but only represent 7% of U.S. credit unions.
“Large credit unions are able to leverage their capital and reinvest it in their credit union, their membership, in advertising and data analytics, which is allowing them to grow rapidly,” said Polet.
All credit unions, regardless of asset size, face similar challenges: growing loans, meeting compliance and regulation requirements, keeping up with technology and increasing income while reducing cost. However, credit unions respond differently to these challenges based on their asset size, he said.
Polet explained that for large credit unions growing loans may mean diversifying the portfolio or going into new lending categories, not just increasing the credit union’s loan-to-share ratio. Large credit unions are focused on obtaining more first mortgages, indirect auto loans, and growing their member business lending.
“Credit unions have an opportunity to create even more member value by offering smaller loan amounts to business members because 70% of small businesses are looking for loans under $250,000, and 39% are looking for loans under $50,000,” said Polet.
The Clear Bets
During his presentation Polet examined compliance, technology, and expense management challenges faced by large credit unions, as well as how they are responding to these challenges, and encouraged large credit unions to look for ways to turn these challenges into opportunities.
“The future is not a clear place, but there are clear bets that we see large credit unions making in terms of where the marketplace may be going, and it is in these insights that credit unions can reflect and find opportunities to grow as well,” Polet said.
Credit unions can learn more about challenges and opportunities large credit unions face by viewing Polet’s Discovery Conference session on-demand at cunamutual.com/registerondemand.