Key conversations to help shape the future of a dynamic industry
The credit union industry is in a state of constant evolution, driven by emerging trends and complex challenges that demand forward-thinking solutions. One resource at the heart of navigating these shifts is our Client Advisory Council (CAC), a collaborative hub where innovation is inspired by collective wisdom and mutual support.
Since 2018, the State National CAC has empowered credit union leaders to come together, share insights, gain consensus on key topics, and join forces with their peers to craft actionable strategies for growth. These strategic insights are not just conversations — they provide essential tools to help support our credit union partners in overcoming obstacles and seizing opportunities.
Navigating Current Challenges: Highlights From Our Q3 CAC Meeting
In our recent Q3 meeting, held virtually, we continued to engage on topics crucial to our CAC members and their credit unions. Jeff Rendel, President of Rising Above Enterprises, guided the session titled “Ripped from the Headlines,” focusing on the pressing news and trends currently influencing the credit union industry.
Key topics and takeaways from the meeting included:
Small Credit Unions: Adapting to Scale
- The National Credit Union Administration (NCUA) categorizes small credit unions as those with approximately $200-250 million in assets.
- Despite a trend toward consolidation — with about 300 mergers annually — these CUs continue to serve an increasing number of members and small businesses.
- The primary challenge for small credit unions lies in the high costs associated with the technological investments necessary to enhance service delivery and operational efficiency.
"Members Credit Union has been partnering with a smaller credit union for about three years now. They have about $5 million in assets and are located in a small town. Although their membership is small, the members are very loyal. Since partnering with them, we've helped them offer products and services they didn't previously have, which has helped expand their membership base."
~ Tim Mullen, SVP Branch Operations, Members Credit Union
Larger Credit Unions: Scaling Challenges and Competitive Pressures
- Credit unions with assets exceeding $10 billion are encountering a different set of challenges, primarily driven by more stringent regulatory requirements and heightened market competition.
- Enhanced risk management and robust governance structures have become essential for CUs in this category.
“Bigger isn’t always easier. Our entire growth plan for years has been mergers and acquisitions, and with that comes good asset growth and new market opportunities, which is great. At the same time, the back office needs to keep up with all that growth, and those enhancements and improvements can be expensive.”
~ John Cotner, VP of Lending, Horizon Credit Union
Cybersecurity Threats: A Persistent Risk for Credit Unions
- Cybersecurity threats like ransomware and phishing are becoming more common and sophisticated.
- Effective strategies to combat these risks include ongoing employee education and advanced fraud detection systems that leverage AI and machine learning.
- AI is transforming service delivery across credit union operations.
- State National also employs AI to streamline processes for our credit union partners, enhancing member convenience and reducing operational redundancies.
Diversifying Revenue Streams"As far as efficiencies, we're actually trying to mirror what State National does with their insurance forms to identify that we have good insurance — we're doing basically that same thing with our loan review process and using artificial intelligence to scan the documents to make sure they're up for accuracy to our core, and so forth."
~ Lisa Painter, VP of Collections & Loan Servicing, Members 1st FCU
- As traditional interest-based revenues decline, credit unions are increasingly turning to fee-based services such as wealth management, financial advisory, and insurance, which provide stable non-interest income and deepen member relationships.
- The demand for personal and auto loans continues to rise, though challenges in borrower qualification persist.
- Credit unions are developing alternative mortgage products to make homeownership more accessible amidst an affordability crisis.
- The shift toward digital banking is reshaping the role of physical branches to focus more on advisory services rather than traditional transactional functions.
- Some credit unions are expanding their physical branches to maintain a tangible community presence, crucial for building trust and engagement.
As our credit union partners continue to adapt to ever-evolving conditions, the insights from our CAC members provide invaluable perspectives that help us shape our strategic decisions to not only meet our clients’ needs but also propel them forward in growth. Thank you to our council members for another informative and beneficial meeting!
For more updates and insights from State National’s CAC, connect with us on LinkedIn
