As they look ahead to the next decade, regional credit unions have the power to shape their future. But what does that really mean when it comes to strategies and a business philosophy that will help them succeed?
As the CEO of a regional credit union, I believe that one big element of success is to sharpen your focus. Most credit unions, ours included, have spent years working to be all things to all people. We may not have done a bad job at it, but that approach won't stand up to the realities of banking in the future.
First, the focus must be on the member you want. Find a niche that fits you. Maybe your niche is the medium-sized city you operate in. Or a particular group of employees and supportive companies. Or perhaps members in an income bracket, such as middle to upper middle.
Concentrate on that niche and how you can prosper by aggressively serving your segment. It may be necessary to leave behind the attitude that if you aren't getting a 1% return on assets that you aren't succeeding. Accept that you may have less revenue and slower growth, but if you can satisfy your board and know you are effectively serving that niche, you can redefine success.
Let's be realistic. Regional credit unions are going to be even more sandwiched between the big national banks and the upstart online companies that seem to come and go. In our market, the big three banks have about 85% of the deposit market. That doesn't leave a lot for the rest of us to fight over, but it can be done.
And we can do it by emphasizing member service. So many members have come to us because of a bad experience with one of those big banks. If you build relationships with people like that, serve them well and be their partner, it will pay off. As regional credit unions, we may not be able to put our names on stadiums or run national ads, but we can take great care of people. That is always going to matter.
And as we deploy new technologies, particularly artificial intelligence, we must never forget to keep personalized member care in the forefront. The key is to use it to make you more efficient and effective, but not add a layer of frustration for members.
When it comes to interacting with members, AI does great with something simple. But as issues get more complex, people still want to talk to people. An AI system that makes a member feel caught in it, unable to get out and talk to a human, is incompatible with the kind of member care that a successful credit union needs in order to thrive.
Similarly, improvements such as speedy account opening and instant decision making, to make it easy to become a member or apply for a loan, will be even more critical over the next decade. You must have a good, efficient first step for people. And that is where the relationship can begin to blossom, with the right mix of technology tools and a member-centric personal touch.
The merger landscape will continue to evolve as more credit unions of all sizes search for scale. There will be merger opportunities; in our case, we have been blessed with five in the last dozen years. All have added to our footprint and been a great fit for our focus. We analyzed how we could make 1+1=3. Often, there is faster growth among merged members who can now get more of the products and services they need from a larger credit union partner.
Philanthropy and community involvement are also going to be vitally important in the future. For credit unions, that people-helping-people foundation is a huge differentiator. Philanthropy extends the personal touch beyond the individual level to the group and community. It will always benefit you to build goodwill and forge strong community partnerships through giving and by involving your employees in worthwhile projects.
In conclusion, and this may sound a bit old-fashioned when we're talking about the future, but I continue to believe that our business is – and will always be – built one relationship at a time. In their financial lives, people want to feel like they have a partner. Find the people in your niche, make them members and help them, and you can be their partner for life.
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