Products Per Member Stagnates
The percentage of credit union members, nationwide, who carry credit union credit cards or financed credit union auto loans, first mortgages or home equity loans has not significantly changed since 2008.
This is one of the conclusions from the latest High Performance Index, which measures the performance of credit unions nationwide over the previous year.
Tony Ward-Smith, founder of Ward-Smith and Company, a Seattle-based credit union consultancy, uses data generated from NCUA 5300 reports to conduct the analysis. The index measures credit union performance with particular attention to the number of accounts and loans per member.
Credit unions that average more than 2.5 accounts per member, and average combined deposit and loan accounts of at least $5,791, have stronger earnings per member, higher return on assets and stronger financial performance, according to Ward-Smith's analysis.
Fewer than 450 credit unions nationwide have managed to reach that standard and Ward-Smith identified three characteristics that credit unions must adopt if they hope to do so.
First, he said, credit unions need to communicate to members that they exist to help people, not merely sell them more products.
“Credit unions are helping places ... banks are selling places,” Ward-Smith said.
Second, credit unions need to increase accounts and loans per member. Those that have more accounts per member also have higher ROA. Higher returns allow credit unions to return more value to members, which in turn further boosts accounts per member stats, Ward-Smith said.
Finally, credit unions must even more completely embrace the digital revolution, because digital services improve convenience while lowering operational costs.
Nonetheless, Ward-Smith said he remains fundamentally an optimist about credit unions in general.
“Consumer banking is one of the most competitive businesses going. Everything about it is changing. Nevertheless, given the needs and desires of consumers these days, the market opportunity for credit unions couldn't be better,” Ward-Smith concluded his report.