The future for credit unions is electrifying--literally. Implementing the best that modern technology has to offer is the way to go, in terms of cost savings as well as service. Attracting the up-and-coming generation of 'grown-ups' (a.k.a. borrowers) is crucial to the survival of the credit union community, and one way of doing that is offering them services anytime they want them. Gen Yers have been raised in an online world and are completely at ease with and accustomed to online services--just witness the wildly huge success of companies like EBay and even First National Bank of Omaha.
We Gen Xers (still borrowers, but also savers) are pretty well steeped in technology also, and many of the baby boomer grandparents are going online as well for work and to keep in touch with their trans-continental grandchildren.
Yes, firstnational.com ranked No. 6 in Kiplinger's Personal Finance Magazine's recent survey of top 10 online banks. First National has just $18 billion in assets under management. Yes, that's extremely large for a credit union, but compare it to the big boys on the list such as Wells Fargo, Citibank, and Bank of America. It's all relative: credit unions are to First National what First National is to the largest banks.
And offering credit unions' old standbys--deposit accounts and loans--in this relatively new venue is just one more avenue to offer member services without the cost of brick-and-mortar. (Mark my words though, branches are making a comeback despite the talk of tech-savvy Gen Y.)
On the back end, look at how even smaller credit unions are adapting to the times. For instance, $8 million Odessa Employees Credit Union learned recently that the bank it had been doing business with was purging its "unprofitable" deposit account (see story page 40). The credit union placed its money with Southwest Corporate Federal Credit Union, which took on the account. After learning about deposit capture, the initial small investment was nothing in comparison to the cost savings Odessa Employees now enjoys, as does Southwest Corporate.
These are the efficiencies that help loosen the noose around net interest margins and eventually equal greater returns to the natural person members.
On the consumer end, products that allow members to make remote deposits are phenomenal from so many angles. Remote deposit capture can be a life saver for the harried small credit union executive, and the same holds true for the sole proprietor who can't close down his or her shop to make a deposit. From the credit union perspective, it could also optimize branch usage, reducing related expenses and members' time in line.
But credit unions' strengths also lie in their abilities to serve niche markets with a personal touch and local flavor. In high- and low-cost of living locations, credit unions are getting more deeply involved in affordable housing, from apartment complexes to mobile homes.
Really, what are these products other than a specific type of mortgage or business loan, both of which credit unions have done for ages? Even if your particular credit union is not currently offering similar products, the cooperative ideals the credit union community was founded upon offers a wealth of knowledge to tap from your peers.
Another cornerstone of the credit union movement is promoting thrift. A few have begun offering high-interest, online-only accounts with certain requirements to compete with the INGs of the world. While the yield offered is high, these credit unions have said not everyone meets the requirements every month so the aggregate pay-out ends up averaging much lower than the actual advertised amount. Linked to a debit card, these accounts are the modern-day checking account. What's stickier than a checking account?
On the regulatory front, NCUA's Outreach Task Force also last week announced recommendations that included continued documentation of credit-union member service (see story page 1). NCUA Board Member Gigi Hyland, who chaired the task force, said the credit unions in the pilot program didn't find it burdensome. However, it is foreseeable that the 50-plus credit unions that are still managed on paper--which are less likely to have the manpower to do the information sifting that could be required under the recommendations--would face some serious challenges. Something like this or other data management issues will either push them into the 21st century or into a merger.
Credit unions of all sizes should embrace the advances in technology that make sense for their particular size, field of membership and other relevant characteristics. The potential results include cost-savings, efficiencies, better member service, and more secure future for credit unions as a whole. Sounds like good stewardship of member funds--yet another founding objective of the movement.
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