OVERLAND PARK, Kan.-Credit unions planning for 2013 beware: Tony Ferris foresees a year of extremes.
Ferris, managing partner for Rochdale Group, told Credit Union Journal attempting to boil down this year's strategic planning focus to a single topic is "all but impossible."
"Moreso than ever, credit unions must be positioning themselves and their strategic efforts to deal with uncertainty and volatility," he said. "It is likely that 2013 will be extreme in many ways."
Ferris said CUs certainly will continue to feel regulatory pressure, which will add "considerable complexity and pressure" on expenses and fee income. He predicted the Federal Reserve is apt to keep rates at historical lows, noting the Fed has begun to signal the end of its policy to pay on overnight funds.
"A discontinuance of interest on overnight funds will cause significant problems for many credit unions who currently hold extremely large investment portfolios and cash reserves," he assessed.
The U.S. economy continues to "struggle to escape the clutches" of a recession which looms worldwide and may yet develop into another downturn, despite all the Fed has invested in turning it around, Ferris continued.
"Oddly enough, all this turmoil presents itself at what is arguably the best opportunity to capture significant market share, as large banks have taken considerable reputational hits," he said. "However, to take advantage of this public sentiment, credit unions must establish a brand awareness to garner consumer attention and then must establish the technological tools to capture their business. Awareness and strategic flexibility are key."
Two Efforts Worth Making
According to Ferris, to deal with the issue of strategic volatility, CUs should take two significant efforts within their strategic actions: First, invest in the development of proactive and systematic enterprise risk management capabilities. Second, develop and exercise stressed scenarios against strategic plans.
"These two actions will allow credit unions to more proactively identify alternatives, potential pitfalls and alternative strategies," he said. "After all, without unbiased knowledge and continual refinement, a strategy may just be a path to failure."