Recently changing regulations andunfavorable market conditions have cast a shadow over the creditunion industry. Lost fee income and rising interest rates havedampened expectations of growth for 2014, driving many creditunions toward starting CUSOs to earn noninterest income. Some haveturned to consolidation to cut costs. According to CUNA MutualGroup, the industry lost 272 institutions in 2013 and consolidationwill continue in 2014. The credit union industry is not alone inthis trend. Sixty-seven percent of midmarket executives anticipatemore consolidation in 2014, according to findings from a Capstonesurvey.

Although the outlook for growth may seem bleak, opportunitiesare there if you know where to look. Rather than trying to keep upwith changes in the marketplace or competition, credit unionsshould focus on future demand.

Ultimately, your growth depends on your success in meeting theneeds of members you have yet to capture. What do they want today?What will they want in the future? When you shift your vision fromcompetition to future demand, you see the opportunities for growth.Once focused on future demand, you can consider five options forgrowth.

Organic growth

For many, organic growth has stalled, but before giving up,consider some creative ways to reenergize your organic growth. Goback to the fundamentals. Think about your core competency, yourorganization culture and your weaknesses. For example, you mayoffer a great service but have weak marketing. You could design andbuild a mobile site to market your services. At the same time, beprepared to think outside the box and search for less-obvioussolutions.

Lowest cost provider

Sometimes, your best option is to dramatically cut costs. Growthin this case might appear more on the bottom line than in toplineincome or size of market share. I call this the jellyfish strategy:You go up when the tide is up and down when the tide goes out.There may not be many natural predators, so you survive, but thisis clearly no way to drive long-term expansion. Note that being thelowest cost provider is distinct from being the lowest priced. Oneof the drivers for credit union consolidation is to leverageeconomies of scale so that services are provided at a lower costbut sold at the same price.

Plan to exit

As painful as it may be, leaving the current market is an optionthat should be seriously considered. If the odds are gettingincreasingly stacked against your success, and you’ve considered anumber of creative solutions with no success, it may be time toconsider selling a piece of an operation.

Do nothing

Of course, doing nothing is rarely a pathway to growth, but Ihave to include it because executives drift into this by defaultevery day. By doing nothing, you effectively let your competitorsset your course. When things seem to be going well, we all gettempted to keep doing what we are most accustomed to. However, thelong-term costs can be disastrous.

External growth

Both credit unions and for-profit businesses have found organicgrowth to be anemic. Traditional services and products no longergenerate the same incomes they once did. Given the currentenvironment, I strongly recommend credit unions explore externalgrowth.

External growth not only refers to 100% acquisition, but alsoincludes other collaborative forms of partnership such as strategicalliance, joint venture, and minority interest. Embracing theseoptions can the most powerful and fastest way to meet desiredgrowth and income levels.

You can use acquisition to quickly add new products and servicesthat are in high demand. For example, with the recent Target creditcard breach you may see future demand for cyber security services.It may take too long to build your own solution from scratch;acquiring or partnering with a cyber-security firm gives you aready-made solution to offer customers.

Whatever growth option you choose, the best piece of advice Ican give is to be proactive and demand-driven. Every organization,even credit unions, faces unfavorable market conditions. Those whowin are the ones who anticipate future demand and use it to guidetheir strategic plans.

David Braun is CEO of Capstone Strategic. He can be reached at703-854-1910 or [email protected].