Consolidation and disruption top the list of UC industry concerns

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Clockwise from top left: Bob Trunzo, Diana Dykstra, Brad Green and Larry Sewell.

At the onset of the pandemic, credit unions quickly turned to digital operations and began creatively helping their members through financial hardship, giving them something to be proud of as they reflect on the past 15 months. But as they consider their future, a few distinct challenges loom, according to executives speaking at CUNA Mutual Group’s virtual Discovery2021 conference on Thursday.

A Discovery2021 session moderated by CUNA Mutual President/CEO Bob Trunzo featured three industry leaders: Diana Dykstra, President/CEO of the California and Nevada Credit Union Leagues and Chair of the Board of Directors of the American Association of Credit Union Leagues; Brad Green, president and CEO of Listerhill Credit Union ($1.1 billion, Muscle Shoals, Alabama) and chairman of the board of CUNA; and Larry Sewell, vice president of community outreach for Together Credit Union ($2.2 billion, St. Louis, Mo.) and chairman of the board of the African American Credit Union Coalition.

Leaders pointed out that the increasing rate of industry consolidation threatens the survival of the country’s small credit unions. “Hopefully we can slow down and minimize the dwindling number of smaller credit unions — we just keep losing so many,” Sewell said. “I know some of them are the result of mergers, but when we lose a small institution, it means there’s likely to be a community somewhere not being served the way it could or should be. Small credit unions play a crucial role in serving people, especially in rural communities. »

Green said: “One thing that sometimes worries me is the fact that we are a consolidating industry. What could we do that would explode the number of new credit union charters? What changes should we make to get these kind of results where the popularity of the model is not in consolidation mode but in expansion mode? »

Other notable challenges facing the sector include growing competition from fintech disruptors and the fact that young consumers’ banking preferences do not always favor credit unions, they said. “One of the things I’m most excited about in the future is the ability to more accurately measure the impact we have on the financial well-being of our members,” Green said. “It gives us a lot of opportunities to differentiate our model. What concerns me is being able to undertake this and maintain our relevance when there is so much disruption in financial services around us.

Dykstra explained that to attract younger members, credit unions should rethink how they develop and present their products and services.

“Younger consumers don’t seem to want to have a relationship with an institution — they’re just looking for a product,” Dykstra said. “They don’t think of a financial institution like we all did, where you walk in, open a savings or checking account, get a loan, and get a credit card. They are simply looking for the best deal. We are going to be challenged to think about how we view membership and how we distribute products.

She continued, “We need to think about how we operate and what we call our products, and not lump them all together. We need to be a bit more agile and creative. Otherwise, these young adults will find other ways to make their business.

Leaders, however, expressed general optimism about the future of credit unions and their ability to help members achieve financial well-being – something they all agreed will be a key goal for cooperatives in the future. to come up.

“I think the new buzz word is financial health, financial wellness,” Sewell said. “Right now, at Together Credit Union, we are in the process of formulating a strategy so that members can get a quick overview of their financial situation. It’s an emotional thing, because even though we’re helping people learn how to save and how to borrow, they need to feel comfortable with what they’re doing and what their financial institution is helping them do.

In a specific example of how California credit unions are helping people achieve financial well-being, Dykstra shared that some are working to open branches in the southern Los Angeles neighborhood of Watts, which currently contains no branches. a credit union and an ATM, in an effort to steer the community away from the payday lenders and check cashers that abound in the area. “This [pandemic] crisis really helped us think about what more we could do,” she noted.



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