SEATTLE–What will credit unions look like in 2025? According to Erin Coleman, one way to divine the future is to stay on top of what is trending today.

Coleman, senior impact director for Madison, Wis.-based Filene Research Institute, said CUs must constantly be thinking about the future and not let themselves be lulled into inaction.

“Today’s trends will shape tomorrow,” she said, noting one of those is the rise of “values banking” – consumers’ desire to do business with organizations that are dedicated to making the world a better place, a movement that “is especially true with millennials,” added Coleman.

Erin Coleman, senior impact director for Madison, Wis.-based Filene Research Institute
Erin Coleman, senior impact director for Madison, Wis.-based Filene Research Institute

Another growing trend is collaborative consumption – also known as the sharing economy. Prime examples include Lyft, Uber and Airbnb. While only a small slice now, the sharing economy is projected to be half of the U.S. economy by 2025, she noted.

“Tech-savvy natives are the future, because 2-year-olds can use an iPad,” she said. “This changes interactions with credit unions. In-branch transactions are trending down while digital channels are trending up.”

The branch is not dead, but the nature of transactions has changed, Coleman continued. Gone are teller lines, with many CUs today more likely to use advisers or universal bankers.

“Both banks and credit unions are building branches and adding mobile options. The goal is not omnichannel, it is omnipresence – being everywhere consumers want to be,” she explained.

She cited a study that found companies with extremely strong omnichannel customer engagement retain 89 percent of their customers versus 33 percent for those that have weak onmichannel engagement.

Crowdfunding, the practice of funding a project or venture by raising small amounts of money from a large number of people, usually using the Internet to connect, is becoming increasingly popular. Coleman said CUs should uncover their members’ social priorities by integrating crowdfunding into current credit union community giving.

Virtual reality, along with the use of wearables, is another trend Coleman is tracking. She said consumers are expected to spend $22 billion on virtual reality in 2020, up from just $108 million in 2014.

“Virtual reality technology can improve the member experience and make it easier for your employees to help members,” she offered.

Gamification is helping people complete tasks that are not very fun by turning the process into a video game. Coleman said Tukwila, Wash.-based BECU has had success doing financial education at schools, in part because it created a gaming app. The app teaches students how to use a credit card, among other financial lessons.

“Here is what you can do next week in your credit unions: Watch the top trends, find out what your members care about most, and then marry trends and member needs by identifying the top opportunity, the top threat and how your credit union will respond to both of those.”

The Filene Research Institute is tracking five key themes that will be important to credit unions in 2025: consolidation, payments, regulation, technology and lending.

With consolidation, Coleman said while the number of credit unions continues to go down, asset quality is increasing. The very look of the NCUA is expected to be different in 2025, if for no other reason there will be fewer examiners due to fewer credit unions.

Auto lending in 2025 is expected to be different than it is today due to the shared economy, Coleman continued. The future should see a mix of owned and shared autonomous cars.

“The model is changing,” she said. “There also will be changes in other forms of lending. More and more unsecured loans are being done by shadow banks, which will do $1.5 billion in loans over the next 5 years.”

Coleman suggested CUs have an opportunity in student lending, as they currently only provide $3 billion in the $1.2 trillion student loan market, or 0.25 percent. Similarly, she said most folks who take out payday loans would rather do so at a credit union.

“Leverage your trusted relationship with your members and use algorithmic banking for short-term, small-dollar loans,” she suggested.

In 2025, more and more people will want to transact financial services digitally, Coleman continued. Smart phone ownership is nearly ubiquitous, she said, especially among higher wage earners. This also impacts payments, which she predicted will continue to move away from cash and toward credit and debit cards, digital currencies, and PayPal.

“Sweden is proposing regulations to eliminate cash entirely,” she reported. “Consider framing your payments strategy based on member preferences.”

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