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LAS VEGAS – A strengthening economy is welcome news to consumers. But with interest rates starting to rise, credit unions can expect slower asset growth and additional spread compression. CUSOs are in a good position to help credit unions deal with the challenges of the changing economy. Speaking at NACUSO’s annual conference at a break-out session on “Financially Speaking: The Big Change.Moving from Current Economics to Strategic Preparedness,” CUNA Mutual Group Chief Economist David Colby told attendees that, “Most credit unions have managed to prosper in bad times as well as good because they have successfully delivered on member needs as determined by the local economy’s impact on their fields-of-membership. Credit unions and CUSOs must keep that focus, but also look at market opportunities to foster growth.” Colby added that, “We are in the midst of a fundamental structural change in the financial services industry. We’re competing with retailers and the capital markets in an era where deposits and loans are treated like any other shop-and-compare consumer commodity. And we’re competing against trillion-dollar global giants.” Putting his economist’s hat on, Colby made some predictions for credit unions over the next four years: * asset growth will average about 6.7%, well below the 10-year average of 8.2%. * overall loan growth will average about 7.7%; and * earnings will remain tight as spread income remains narrow. “On one side of the balance sheet, retailers are originating loans to move their products. On the other side are mutual funds, matching any deposit instrument for risk and return, with no cost for tellers, deposit insurance or unprofitable cash function,” said Colby. Though he’s confident credit unions can still generate solid financial results in the near future by looking beyond traditional savings and borrowing and more financial advice and strategic planning for wealth preservation, Colby still went over what he sees will be the biggest challenges facing CUs: serving baby boomers’ financial needs in retirement; securing replacement borrowers; controlling expenses; and regulatory stability. He urged CUSOs to “take advantage of economies of scale in purchasing and delivering products and services and look for more ways to leverage efficiencies. ” He also challenged attendees to take the lead and “ elevate the credit union mission from one of promoting thrift, to one of ensuring member well-being.Build a continuous understanding of your membership and what new members you want to attract. Make sure your members’ needs are met with your solutions and that your solutions are easy to obtain.” -

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