One of the most important lessons learned during the recession is that during certain market environments, members cannot be enticed only by interest rates.

In some markets, credit unions could lower loan rates across the board and it most likely would not generate significantly more demand. Members have taken the opportunity to deleverage their debt profiles. Over the past three years, their debt servicing has declined from 19% of their disposable income to less than 11% in more recent times. This is beneficial to their personal financial position but it has been adverse to credit union balance sheets.

Many have stated a reluctance to return to previous debt loads, which could impact balance sheets for the next five to 10 years. For this, credit unions must be prepared to adjust, especially making sure that their infrastructure and operating costs structure is accommodative to this potential change. Member serving and retention is a major principle that all credit unions must pursue. Convenience remains a key, and it doesn't necessarily mean higher technology.

Consumer Uncertainty Remains

The latest surveys conducted by CUNA reflect a high number of people that are still unsure what products are offered by credit unions. Fewer younger people respond that credit unions are a option they are considering for their financial needs, yet there will be more wealth passed over to this generation in the next couple of decades than in any previous time in our history. But once enlisted, credit unions have the highest satisfaction levels noted by their members than either banks or thrifts. Yet, as noted before, our market share of consumer loans continues to decline.

But much of these current phenomena are cyclical. Economies improve, demand returns, purchases increase and financing for those purchases will grow. This is a great time for credit unions to "re-tool" and begin to concentrate on what each does best to the specific needs and demands of their membership. We don't have to be everything to everybody to be successful. It will take each institution to determine those membership needs and structure their institutions such as to meet those needs effectively and efficiently.

Brian Turner
Strategic Solution Director
Catalyst Corporate, Plano, Texas

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