The Challenges of Growing Credit Unions

December 1, 2015

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As credit unions grow, they realize various benefits such as lower costs, lower interest expenses and higher return on assets. However, larger credit unions also face various challenges, particularly during growth mode.

The credit union landscape

Credit unions in the U.S. have been growing steadily over the past few decades, while the industry has consolidated. Since 1980:

  • Credit union membership has increased by 218%
  • Credit union assets have grown by 1,512%
  • Credit union loans have increased by 1,252%
  • Number of total credit unions have declined by two-thirds

American credit unions now have over 100 million memberships.

Growth hardships

As mentioned, that growth often brings about a new set of challenges for credit unions to contend with, as the institution becomes more complex and competition for new members increases.

1. Keeping up with increasing compliance obligations

As credit unions grow, regulatory requirements increase, putting more pressure on the institution.

2. Growing membership

All credit unions are focused on growing membership, but as credit unions grow, they must ensure they have the offerings to keep members happy and continue attracting new ones—without sacrificing profitability.

3. Competition:

As a credit union grows, it faces increased competition from larger credit unions and other lenders, such as regional and national banks. It must ensure its services and offerings are competitive to retain and grow membership.

4. Upselling to current members

Growing credit unions often struggle to increase the value of existing members, which hurts profitability.

5. Hiring staff

As an institution grows, the need for staff generally increases. In addition, growing credit unions may need new departments or job responsibilities to support new initiatives or compliance obligations.

6. Cost of technology

As credit unions grow and add services, technology is generally added as well—which can be expensive during that growth stage.

Are you interested in learning more about the challenges of growing credit unions, and how to overcome them? Be sure to download our latest ebook, Overcoming the Challenges of Credit Union Growth. And if you have any thoughts to share on the topic, please use the comment section below.