With the number of new competitors growing together with new regulations that need to adhere, it isn’t hard to see why credit unions are having a difficult time. Plus, many credit unions are discovering that traditional membership growth strategies aren’t enough to keep afloat. Much more, the traditional membership growth strategies no longer sustain the members and the credit union in the long run.
Credit unions and growth may not seem like they go together unless you’ve already established yourself and the brand; however, becoming a strong credit union where your members fully and truly benefit needs creating a sustained and innovative growth. There are a lot of challenges one can face when trying to achieve growth while growing your membership as well. Even growing your loan book could become difficult, and you will need to merge and partner with other credit unions.
So, credit unions definitely need to take a step back and examine the bigger picture of looking more into the segments of the population that would create and provide more influence when talking about loans as well as products and services.
Check out these four growth strategies that credit unions may consider when trying to grow the number of memberships:
Loan products. This is what credit unions are usually known for. They loan money with very low interests compared to banks and traditional loaners. Furthermore, they have better terms. However, credit unions aren’t known for their other offers such as retail investments or insurance. So, in order to compete, the management should take a look at the lineup of services to see where innovation can come into play. The board of the credit union should also play a part in taking a look at the possible innovations. For example, there has recently been a demand for mobile and online banking. There aren’t any signs that these are slowing down as mobile bill payments have increased in usage since 2012. According to Fiserv’s Seventh Annual Billing Household Survey, mobile bill payments have increased from 8 million in 2012 up to around 27 million in 2014.
With this information, there are a lot of credit unions and banks that have used or partnered with Apple Pay. It allows users to conduct payment transactions using the company’s products. While penetration is small, online lending continues to be an area to watch, especially as more consumers are opting for fast decisions and approvals versus visiting branches to submit loan applications. In order to help accommodate the shift, online lenders have developed new models that can be linked to social media platforms or online shopping sites. These give the ability for credit unions to have an edge to help stand out from the rest of the competitors in the financial service industry.
Millennials are continuously reaching headlines for their use of money and heavy reliance on technology. In this case, credit unions would need to “court millennials” to create a long-term relationship with this generation. According to Visible Equity, the average age of a credit union member reaches about 48 years old. Therefore, it’s difficult to create a long-term relationship with them as they approach their retirement years. So, the millennials have an influence on the population and carry a lot of debt. This is due to the very demanding inflation, student loans, and other things.
However, unlike the older generations, it’s difficult to reach millennials with the traditional outreach method. As mentioned earlier, the millennials are heavily reliant on technology, so credit unions would have to show and meet them where they thrive. This means credit unions need to have an online and mobile presence. Therefore, social media platforms should be used more often.
With this knowledge, credit unions should be able to provide millennials with the best deals they’re looking for. So, credit unions may consider lowering interest rates on products like vehicle loans or personal loans. If a credit union doesn’t offer prepaid cards, it may be a good idea to start sooner rather than later as it’s a go-to choice for millennials. Adding a rewards program may create a potential long-term and hopefully a loyal relationship.
is no longer just print ads in newspapers or sent directly through the mail, which was enough to woo in some potential customers before. Nowadays, marketing plays a whole different ball game as marketers now have to look at the highest priorities of their consumers. Therefore, looking into the habit of your target consumers is needed. By looking at the potential members’ habits, credit unions can easily tailor their products and services. For instance, looking into their members’ habits like demographics, how much they tend to spend, where they purchase items, and how likely they are to save for big-ticket items. By having these information, the credit union can create a “base” on how to improve marketing and how to make it effective. Furthermore, they’ve also got to look into what specific departments the credit union is relying on and what isn’t communicated well in terms of marketing.
Organic growth, organic traffic
Similar to how you’d want a website to be visited with organic traffic, credit unions should also want or at least aim for organic growth. According to Visible Equity, there are at least 260 mergers that happened in 2014. Most of these are taking down credit unions that are under $50 million in assets alone. While there are still a good number of credit unions up, its decline is still evident.
Industry analysts credit the growth with a continued rise in used and new auto sales, improved employment figures, more consumer demand for credit, and credit unions getting more aggressive with loan pricing as they compete with banks.
According to Visible Equity, “Expanding existing and internal relationships goes back to what drew members to the credit union in the first place: low rates, better service, and being an alternative to traditional competitors. However, the next level of organic growth should include strategic plans to stay current and innovative.”
If your credit union feels like it’s having difficulty because it’s small, you should know that there are different ways of looking at how to fix it. You would just need to top it up a notch to grow your credit union as well as your members. Maybe you could find another credit union in your area to merge with to create a new pool of members who are all seeking bank alternatives.