LAKEWOOD, Colo.–Credit union leaders have weighed in with their forecast for what a post-pandemic world will look like for credit unions, with views on when lending might return to “normal,” how their operations have been affected, and where they believe credit unions should be focused moving forward.
In the survey conducted by Back Office support CUSO Aux, credit union leaders were asked 25 questions related to the economy, operations, growth, competition and branding.
In all, 34 credit unions participated, ranging in assets from $5 million to $6.7 billion and spread out geographically from Portland, Ore., to Portland, Maine.
The Findings
Among the findings, according to Aux:
The Economy
Aux reported it first asked how concerned participants were regarding inflation impacts on members and employees. On a scale of 0 (not concerned at all) to 100 (extremely concerned), the average number was 68.
Aux also asked:
- When participants felt economic growth would return back to normal. Nearly three quarters of participants responded not until 2022 at least, and over one third responded even “beyond Q2 2022.”
- When consumer spending habits would return back to normal. Answers were split nearly across the board, ranging from Q4 2021 to beyond Q2 2022.
- When borrowing habits would return back to normal, with three quarters of participants responding not until at least 2022.
- Are there areas you feel consumers will continue to spend more on than others? Home improvement and travel were popular answers.
- Will there be a run-off on deposits as consumers start to spend again/more? Some (41%) said no, while 35% said yes.
- When will credit unions need to think about attracting deposits again between now and beyond 2024? One third said 2022 and one third said 2023.
Operations
In an open-comment question, Aux asked participants to list their top three operational concerns at this time. Staffing, including lack of talent pool and retaining staff, were common concerns, as well as loan demand, low interest rates, and inflation were the primary answers, Aux reported.
Aux said it asked a series of questions surrounding branches, including:
- Which safety protocols for members/employees are you continuing to use? Common answers included CDC requirements and frequent sanitation of surfaces, as well as window shields. Least common were mask requirements for members and temperature checks.
- How long are these protocols likely to continue? Two thirds of respondents said between Q3 and Q4 2021.
- Aux asked how participants’ employees were working right now. 40% said hybrid, and 35% had fully returned to work. Aux also reported a smattering of unique scenarios, including: “86% of staff remote until September, branch staff in-person;” “Branch employees are all on-site. Roughly one-half back office;” “Our employees have worked in the office throughout unless ill.”
Fraud & Technology
With the rise in identity fraud during the pandemic, Aux said it was curious to know how the trend is affecting credit union operations. CUs were asked if member verification technology is part of their 2021 plan, with 32% saying they were actively looking or had already implemented technology to combat it, 12% had it as part of their 2021 plan, 32% had it on their radar but did not find it urgent, and 17% said they were going to address it in 2022.
With the increased usage of digital channels due to changing consumer banking patterns in COVID and post-COVID, Aux asked:
- Do you feel your credit union is positioned to tackle technology changes? On a scale of 0 (not at all positioned) to 100 (very well positioned), the average number was 70.
- Do you feel your members as a whole are eager to adopt technology changes? Using the same 0 to 100 scale, the average number was 66. The graph below shows correlation between each participant’s abilities to provide such changes and their members actually desiring them.
With regard to branch operations, Aux asked when participants think member usage of branches will return to pre-COVID levels, with 60% responding that they will never return to pre-COVID levels, while 30% said they have already returned to pre-COVID levels or will this year.
Lastly, Aux asked an open-comment question regarding what new products or services participants plan to implement in 2021 or 2022, and multiple participants said new branches, chat bots, and contactless credit cards.
Industry Growth
Aux asked participants how important member loyalty is to their credit union now, on a scale of 0 (not at all important) to 100 (extremely important). The average response was 91.
Aux also asked:
- What should be the credit union industry member focus be moving forward. Fifty-five percent of participants selected Specific Products/Services and 47% selected Member Segments. Other comments included, “Financial Advocacy - Financial Planning for Members,” “Life stage products/services and community support,” and “financial inclusion and DEI.”
- Aux said it then asked “the big taboo question”: Do you believe credit unions are in competition with each other? Sixty-four percent said yes, 20% said no, and 15% said other, including, “in some areas but still cooperative in many,” and “to a degree they are. There is still the common ground.”
- When asked which competitors participants are most concerned about, big banks, neo banks, and Amazon were top selections.
Branding
The last subject Aux said it wanted to investigate was branding. Aux asked participants what they have done or plan to do to change/update their credit union’s brand. Nearly 50% have updated their websites, and a third have updated their messaging, revisited their brand strategy and positioning, and revisited their value propositions.
Aux also asked:
- How do you feel your members' needs and values have changed? In an open-comment response, common themes were faster access to money and more digital tools.
- How do you feel your employees' needs and values have changed? In an open-comment response, common themes were a better work/home balance and flexibility.
Supporting Causes
The last question Aux reported it asked in the survey focused on causes and support. Respondents were asked, “At this time, do you feel there is more or less of a need for your credit union to publicly support causes, such as Black Lives Matter, Blue Lives Matter, LGBTQA+, women-owned and minority businesses, ethnic solidarity, conservative or liberal hot topics, etc.?”
According to Aux, the question gathered nearly two-thirds of “other” comments, such as, “We continue to address causes important to our sponsor;” “At the time it may be better to remain neutral;” “We have internal meetings for staff but did not want publicly advertise any position on political issues.”