MADISON, Wis.—That larger credit unions have been getting larger and growing faster than smaller credit unions, some of which have even reported member and asset declines, is no secret.
Many reasons have been cited, but when economists are asked why a rising tide isn’t raising all ships, they told CUToday.info the primary reason is technology, especially when it comes to flat or shrinking membership at small CUs, even while big CUs boost enrollment.
According to CUNA Mutual Group’s October Trends Report, which analyzes data compiled by CUNA, credit unions with assets greater than $1 billion reported membership growth of 6.3%, while credit unions with assets less than $20 million reported membership declining by 1.6%.
CUNA Mutual Group Chief Economist Steve Rick explained that the report data does not include mergers, failures or CUs growing out of the small-size asset class. What is reflected in the numbers are members walking out the door.
“The bigger credit unions have the technology dollars to do mobile and online banking well, which is what members are asking for now, especially Millennials,” said Rick.
Rick pointed out that a large segment of credit union growth in the past year has come from Millennials, a group big CUs have been more successful in penetrating.
“The smaller credit unions are not signing up the younger members,” said Rick.
Digging deeper into the data, Rick pointed out that the smallest CUs are experiencing the greatest rate of membership decline.
Curt Long, NAFCU
“Those with less than a half million in assets are really shrinking—by almost 6%,” he said.
CUs between $500,000 and $1 million are losing members at a 1.5% clip, and those $1 million to $2 million are shrinking by 1%.
“All the way up to $50 million we are losing members,” said Rick. “The reasons for the decline are many, including small CUs simply not having all of the products and services of the bigger organizations.”
Dwight Johnston, chief economist with the California and Nevada CU Leagues, agreed that larger credit unions—in addition to mobile banking and other online services placing small credit unions at a distinct disadvantage—also do a better job with indirect auto lending, which economists cited as a driver of overall CU membership growth in the past two years.
“Beyond that, I think it’s safe to say that being a small credit union is getting more difficult,” said Johnston. “Low rates have caused earnings to drop, further limiting what they can do to attract members.”
Curt Long, chief economist and director of research at NAFCU, said the decline in small credit union membership is not being skewed by any particular credit unions and that the issue is widespread.
“I found that the number of credit unions under $20 million that are growing is down to about 35%. So nearly two-thirds of credit unions in that class are shrinking,” said Long.
Despite what the numbers show, Johnston said the movement can’t declare the small credit union sector dead, or dying.
“There are still some small credit unions doing well as they have developed a niche market,” said Johnston. “But the numbers don’t lie. It’s getting more and more difficult for small credit unions to remain relevant in the changing landscape of financial services.”
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