Building loan diversification, preparing for regulatory changesand implementing new operational efficiencies are three of thelargest trends industry experts expect will create newopportunities and challenges for credit unions throughout 2016.

Ted Bilke, president of core platforms provider Symitar in SanDiego, Calif.; Pam Easley, president/CEO of business lendingpartner Extensia Financial LLC in Northridge, Calif. and RyalTayloe, vice president of credit unions at cloud-based solutionsprovider nCino in Wilmington, N.C., offered insights about whatthese trends mean for credit unions that are already competing orare planning to serve the member business loan market this year.

More credit unions will focus on loan diversification strategiesby entering the member business loan market or getting involvedwith some aspect of MBL through loan participations, one expertnoted.

“Our customers and prospective customers are interested in usingour system to facilitate loan participations or selling loanparticipations,” Tayloe said. “A lot of credit unions have beenlooking to get into business lending, have a small portfolio ormaybe have hired a person with a credit background as opposed to asales or lending background who are deploying the strategy ofbuying participations in order to get in the game and grow theportfolio more quickly.”

Industry experts also foresee changes in the way regulators viewtheir approaches to their jobs and places in the industry.

Particularly when it comes to member business lending, Tayloe said regulators are graduallyshifting from a prescriptive-based approach to a principles-basedapproach.

Bilke said he has seen regulators become smarter about theexamination process.

“They're getting better guidelines on what to ask for,” he said.“They are putting more pressure on the credit union to do theirvendor due diligence to make sure that as many risks as possibleare mitigated, knowing that it is impossible to mitigate all of therisks, but being able to close the obvious channels.”

While credit unions have become accustomed to managing in a lowinterest rate market, they now have to adapt to managing in ahigher interest rate environment.

“You are going to see more competition for loans but you arealso going to see probably less loans due to higher interest ratesbecause certain borrowers will be priced out of some markets,”Easley said. “It's about managing your expenses on one side, and astechnology solutions come available, how you can use that to youradvantage competitively and operationally.”

To drive more operational efficiencies, credit unions areexpected to leverage solutions that will help them offerself-service options for time-strapped members.

Read more details about these 2016 trends in the Jan. 13,2016 print edition of Credit Union Times.