The rules of the game have changed. On the surface things mayappear calm, but underneath, currents are swirling and businessfundamentals are being transformed rapidly.

Credit union CEOs preparing for the next 12 to 18 months arecontemplating much more than just the economic, regulatory andcompetitive environments. They are closely monitoring customersentiment. To develop strategies that will create profitable andloyal members, credit union executives must begin by asking a toughquestion: Does our business model still work?

As a former credit union CEO, I have seen firsthand theindustry's love of the status quo. Innovation as a concept isdifficult, but credit union leaders are changing and becoming moreagile. They are warming to the idea that we must all look at thecredit union business model differently – and not only because thefinancial habits and preferences of constituents are changing, butbecause the players are changing. This creates constantlyoscillating rules of engagement.

A focus on four very important competencies will help creditunions maintain – and possibly even elevate – their position in thefinancial marketplace: 1) Profitability, 2) Efficiency, 3)Product/Service Mix and 4) Deeper Member Relationships.

Profitability

Profitability remains tight across the industry, in large partbecause the top three non-interest income sources (non-sufficientfunds, debit interchange/fees and credit interchange/fees) willmost likely take hits from regulatory and environmental burdens.With reduced loan demand, economic uncertainty and interest ratespredicted to remain low into 2013, the focus must be on ways to addor raise fees – smartly.

The trick becomes determining which services members will payfor. Clearly, there is very low tolerance for monthly fees on debitcards and checking accounts. But how would members perceive asimilar fee if new perks were added, such as merchant-fundedrewards? Such perks may provide credit unions the additional feeincome needed to survive.

Efficiency

Just as families all over America are re-evaluating theirexpenses in the name of good old-fashioned budgeting, credit unionsmust do the same.

Video teller machines, teller cash recycling, remote depositcapture and advances in mobile and online banking and self-directedtransactions will help credit unions gain more efficiency. Creditunions that simplify everyday financial transactions will beproviding value while also saving costs.

Product/Service Mix

To be ready for the road ahead, credit unions need tore-evaluate their current products, like checking and debit cardsprograms. They must also consider the development of new products,such as an overdraft line of credit, point-of-sale financing,retail loan programs, investment products – or even more innovativeyet, developing CUSO business.

Mobile, EMV and chip-and-PIN technology will be key areas ofconcentration in 2012, as well. Without a doubt, mag-stripe cardsare the plastic of yesterday. Migrating to new technologies will beworth the investment.

Deeper Member Relationships

In the coming year, credit unions have a great opportunity togenerate more income from existing members. Laser-targeted dataanalysis tools will give CEOs and other staff the ability to drilldown to the member level, while modeling tools will lend thequickness necessary to test new products and ideas before pullingthe trigger.

A new kind of member will be on strategic minds, too. Theunbanked and underserved represent an outstanding opportunity forcredit unions. This includes young people who have differentfinancial priorities than generations past, as well as retirees whoneed more financial help in their twilight years.

As loan demand remains sluggish and regulatory burdens continueto stifle traditional income sources, creativity will be crucialfor credit unions. The goal must be to recognize the very realopportunity that these unprecedented times present and to make adifference in the everyday lives of loyal members.

Shazia Manus is CEO of The Members Group in DesMoines, Iowa.