Scottsdale, Ariz.-based Cornerstone Advisors on Monday released The Cornerstone Report: Benchmarks and Best Practices for Credit Unions, which draws upon detailed data from 62 credit unions with assets more than $250 million.
A bottom-line finding is that the gap between best performers and the rest often is immense – “the best often are doing two or three times better than low performers,” said Sam Kilmer, a Cornerstone senior director, in an interview. The plus side of that, said Kilmer, is that “there is plenty of room for many credit unions to improve.”
In a press statement, Cornerstone Advisors CEO Scott Sommer elaborated on that theme: “With vast gaps between high and low performers in lending productivity, delivery channels and other measures, there is so much room for improvement.”
The study also documented the sea change that has transformed financial services in the past half-decade as mobile and online banking have exploded in usage. Per Cornerstone’s findings, “Combined Internet and mobile logins have surpassed in-person teller transactions, revealing a distinct shift in member service delivery channels from brick to click.”
Mobile penetration is not even across the industry, however, said Scott Hodgins, Cornerstone’s research director. He said that at the best performing credit unions perhaps 25% of share draft accounts use mobile banking, compared to around 8% at low performing institutions.
Kilmer pointed to loan origination as an area of powerful possible operational improvements because, presently, most loan origination at credit unions continues to be ink and paper and in-person.
Per the Cornerstone data, “the median is 16% of consumer loans at credit unions originate on the Internet and 23% of mortgages are opened there,” said Kilmer, who suggested that better performing institutions are seeing much higher rates of Internet activity which delivers cost savings to the institution while also bringing convenience to loan applicants,
Kilmer also pointed to metrics around fee income per share draft account as showing where many credit unions could improve. “The difference between high and low performers is $85 per account per year,” he said, indicating that the median fee income – NSF charges, debit interchange, etc. – is around $150 per account. “Many credit unions have a lot of room to improve here.”
An unexpected finding in the report involves credit union spending on technology. As noted by Cornerstone, “Technology spending as a function of size has decreased slightly from 2008 to .0354% of assets. The only technology spending showing any growth was Strategic Systems, which consists of specialized applications in loan origination, branch automation, analytics, document imaging and investment management.”
The full Cornerstone report is for sale here.