By Ray Birch
TACOMA, Wash.—The pandemic is forcing credit unions to shorten the timeframe of the strategic plans they’re creating this year—and a big part of that discussion the future of branches.
Michael Beall, chief strategic and advocacy officer at CU Strategic Planning, who has facilitated several strategic planning sessions for credit unions this year, said the focus has been on the near-term with the economy—and future—much less predictable than in years past.
Beall’s comments are being featured as part of a series in CUToday.info examining how strategic planning is changing in 2020 as a result of the coronavirus pandemic and resulting economic and consumer behavior changes.
“Things are uncertain now,” said Beall. “You simply can’t plan too far out. The timeframe for strategic viewpoints has gotten shorter. There are not as many credit unions saying let's put together a five-year plan. More of them are saying let's really focus on what we expect to do the rest of this year and how do we ensure success next year.”
Beall said many of the planning discussions to date have been focused on determining what consumer behavior will be like once the pandemic ends.
“As we know, a lot of credit unions closed their office lobbies, and many only accepted business through drive-thrus,” noted Beall. “And when they finally reopened lobbies many credit unions said they found people didn’t come back to the branch in the same way. Many remained using digital services, and when they stopped by the office they used it for different needs than they did in the past.”
The Future of Branching
That has led credit unions during strategic planning sessions to take a hard look at the future of branching, said Beall.
“They're starting to have conversations about whether branching will look the same as it does today in the next three years,” he said. “I think credit unions are focusing heavily now on delivering documentation electronically.”
That means greater use of electronic signatures than has been used in the past, a topic that has been kicked around with regularity during planning sessions, said Beall.
“Credit unions are looking at how they might incorporate electronic signatures on a much larger scale,” he said. “Too, credit unions are now really trying to get much clearer focus on electronic delivery systems many more consumers are converting to using.”
A Hot Topic
Not surprisingly, net interest margins, which have been shrinking and are forecast to get even tighter, are a hot topic of discussion, said Beall.
“It is interesting to note that that many credit unions are doing well, financially, despite the pandemic,” said Beall.
Nevertheless, Beall added the credit unions with which he had been working have made a prominent agenda item out of the products that will either keep them profitable or help bring return profitability—largely auto loans and mortgages.
Outside of an unpredictable future, what has many credit unions concerned is the growing number of deposits and how to manage that growth, said Beall. As CUToday.info has reported, due to the flight to safety and federal stimulus, credit unions in the second quarter experienced record savings growth, which is sending capital ratios downward.
Beall said credit unions are discussing what might happen if a second round of federal stimulus happens.
What is not being ignored during planning sessions is the possibility of COVID-19 resurgence this winter.
“Then you are right back in that situation of really having to work closely with your staff and members on illness, protection…,” said Beall.
Mike Beall
Coming at a Cost?
But in all of this discussion about the shift to digital coming at the expense of the long-time CU advantage over banks in personal, face-to-face service?
No, according to Beall, who said he has found credit unions are aware of the issue and have been discussing strategies for maintaining a personal connection in a growing digital world.
As CUToday.info reported, for the first time in the history of the American Customer Satisfaction Index (ACSI), this year banks have been given a higher customer satisfaction score than credit unions.
Meanwhile, the pandemic has actually created a great deal of goodwill for credit unions, executives are saying during planning sessions.
“Credit unions recognize that consumers really appreciate what they have been doing for them during these difficult times,” said Beall. “Organizations that were prepared to problem solve with consumers…a lot of loyalty has been built up in these recent months. I think credit unions have really proven themselves, that they are partners with consumers.”
Regulators Are Watching
Beall added some of the discussions are focused on how regulators are closely watching credit unions.
“This year is challenging and regulators want to know if the credit union is on top of things,” he said. “I think regulators this year want to know that you are having productive strategic planning sessions.”