Counteract Growth Challenges with New Member Offerings

December 15, 2015

Compliance Real Estate Tax Monitoring Lender Challenges

In a recent blog, we discussed the challenges credit unions often face while growing, including new compliance hurdles, growing membership, rising cost of technology and more. This topic likely resonates with many institutions today, as the credit union industry has been growing continuously for the past few decades.

With 218% growth since 1980, American credit unions today have over 100 million members nationwide. Meanwhile, the industry has consolidated as credit unions have declined by two-thirds in that same time period. With these two trends combined, many individual credit unions are experiencing significant growth—and the challenges that come with it.

In this blog, we discuss one strategy to overcome those challenges: increasing member offerings through new lender services.

The membership challenge of growth

As credit unions grow, they face a number of challenges specific to growing their membership:

  • Now that they are larger, they must compete with larger credit unions and other large lenders such as regional and national banks
  • Because they are larger, members expect more from them, and it is imperative to retain current members
  • It becomes harder to keep growing and attracting new members at the same rate that the credit union did when it was smaller
  • Although it is essential to add new services to attract and retain members, adding new services costs money, and it may not be profitable to add a new service while still growing

Because profitability is a concern, growing credit unions are often faced with the problem of sacrificing profit short-term to attract members with new lender services, or struggling to compete due to a lack of appealing services.

New lender services for members

A solution to those issues listed above is offering new lender services that add value for members, but are also fee-based. This brings in additional revenue for the credit union, while providing the value that members are looking for in a credit union.

A common example of this is fee-based or value checking, where a credit union offers a premium checking account for a fee. That premium checking account includes valuable services for the consumer, such as identity theft protection or credit score monitoring, and many institutions have found that members are willing to pay a nominal fee for such additional benefits. This allows the credit union to offer valuable services to members without sacrificing profit.

Want to learn more about the challenges of growing credit unions, and multiple strategies to overcome them? Be sure to download our latest ebook, Overcoming the Challenges of Credit Union Growth.