What are the biggest challenges facing credit unions in the next few years when it comes to strategic plans for growth?

Credit Union Journal spoke to a number of experts to gauge their views. Here's what they said:

Bill Rockeman, senior consultant at the Wisconsin CU League who facilitates strategic planning sessions, said one of the most pressing issues is technology. "With things like Apple Pay and mobile devices becoming more popular, credit unions need to get moving on upgrading their tech capabilities as well as getting deeper into social media."

But the steep costs of upgrading technology make CUs reluctant — especially smaller institutions. "I talk to them about the [related] expenses and let them make that decision [on spending]," he said. "We don't talk to them about how much they want to spend. We have a cost structure [for our services] based on [their] asset size."

Mark Klinkert, VP of education and training for the California and Nevada CCU Leagues, explained delivery channels, including mobile banking, are especially important in formulating strategic plans. "Some credit unions are just ramping up this capability, while others have been active for some time and are focusing efforts on unifying various delivery channels...to provide a consistent and seamless experience for their members," said Klinkert, who is also manager of the league's Professional Solutions unit focusing on strategic planning.

John Pembroke, president and CEO of Credit Union Executives Society, said to service members' needs and compete with other institutions, most CUs have branches, ATMs, online and mobile channels. But the questions should be: "Can these channels be optimized to delight members and drive efficiency? Is the service and brand experience consistent across all channels?"

Karen Houston-Johnson, VP of OnBalance, a department within Credit Union Resources, a subsidiary of Cornerstone CU League, emphasized mobile payments and mobile banking are "critical issues" for CUs, but "you cannot stop there."

She noted the issue of mobility is much broader than just mobile banking — the question is whether the CU can successfully replicate the entire member experience in a mobile format. Things to consider include: opening an account; applying for, closing, and funding a loan; interactive chat and video conferencing capabilities; and offering an extended hours contact center support for those times when the electronic wallet is not enough.

Youth and the Underserved

Credit unions must attract more millennials and younger members who have grown up in a highly technological world, Rockeman noted. "The average age of a credit union member is about 47," he said. "Obviously, credit unions have to get younger, become more appealing to youths, in order to sustain the business."

Also, given the huge number of under-banked consumers, CUs should consider reaching out to these segments to establish a broader member base. "Considering potential [new] markets is often one of the strategic discussions credit unions undertake," Klinkert said. "Choosing those markets to focus attention on is unique to the individual credit union. For some, the under-banked market is a primary focus. Others may place a priority on the millennial market. For still others, it might be finding ways to better penetrate their core membership group."

But Houston-Johnson further cautioned CUs also must take into account on how to serve the underbanked while satisfying regulator risk concerns and generating revenues.


Managing the loan portfolio, the bread-and-butter of the credit union business model, should always form a core part of any strategy planning session, say experts.

One common issue: how to make lending more convenient for members. "Discussions [on potential] solutions to this challenge range from improving internal policies and processes, to indirect lending, to mobile lending capabilities."

With respect to improving profitability and maintaining healthy loan volumes, Pembroke said CU executives should ask: "Are existing loan portfolios optimized? Are there new loan products that may appeal to a credit union's membership?"

CEO Succession

As credit union CEOs retire and other C-suite executives are often poached, succession and retention should be of paramount importance in strategic planning sessions, the experts agreed.

Klinkert said that there should be in place a plan for succession before the need becomes immediate.

"Some are doing nothing [about this] — that is a major factor as to why there is a credit union being merged out of existence, on average, every business day," she said. "Smart credit unions are getting serious about CEO/management and board succession planning by partnering with experts in the field... to create formal succession plans driven by methodologies that are updated at least annually."

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