A Blueprint for Credit Union Growth to Close Out This Decade

We have three years until we hit 2030. It is time credit unions get their MoJo back.

It is a little more than 1,000 days until we turn the page on this decade and enter into the next. The last time the calendar went from ‘29 to ‘30, the stock market had just endured Black Tuesday (which officially marked the beginning of the Great Depression), the Dust Bowl began (exacerbated by the Depression), political extremism was expanding throughout Europe, and life savings were being wiped out.

Now is the time for credit union leaders to set aside the every-day “things” and ensure they are laser-focused on the big things needed to ensure their survival.

In a recent story on CUToday.info, they reported on the most recent analysis on tthe status of credit unions from BlastPoint:

• While loans from credit unions increased about 5%, the average credit union only recorded loan growth of 0.2%.

• Half of credit unions were flat or lost loan volume over the most recent quarter. Banks on the other hand saw 80% of institutions see loan growth in the same period.

• And probably most stunning: the average credit union lost 0.7% of its members, and over half of credit unions have fewer members today than they did a year ago.

And that is despite the reality that credit unions invest more money in local communities than other banks, they return their profits back to their members (some even do special year-end dividends just for being members), and they have easy to access products and often offer products banks don’t (like indirect car loans and Home Equity Lines of Credit or HELOCs).

So, what is a credit union to do over the next 1,000 days to ensure they have a decade to remember come 2030?

Invest in Growth

In credit unions, the name of the game for the past decade has been “growth”. I’ve heard leaders say we want to reach $10 billion, and I’ve heard other teams say they just want to grow to remain a strong community partner. Both can work, but growth must be smart, strategic, and sustainable.

Hire a Chief Growth Officer

Contrary to the name, they aren’t focused on “growth” but building strategic alignment within the organization to build a growth eco-system. A recent job description a credit union used to promote this role was clear and on point: “serves as a strategic partner responsible for developing and executing enterprise-wide growth strategies that expand membership, deepen relationships, strengthen the credit union brand, and improve organizational performance.”

Name Someone Responsible for Deposit Strategies

The need for deposits will not dissipate for most credit unions over the next few years. AI, and now Meta’s Muse, is going to make keeping deposits a constant hamster wheel. According to the Banking Transformed podcast, traditional financial institutions have lost $3 trillion over the past three years to NeoBanks. Even when you take out new banks like Chime and SoFi, money moves from institution to institution with ease while people of all ages chase rate. In partnership with the Chief Growth Officer, deposits are built on trust, speed, and relationships.

Assign Someone to Oversee Relationships

Maybe this is assigned to the Chief Growth Officer or maybe someone who reports to them, but it can’t be the Chief Operating Officer, the Chief Experience Officer, or even the branch managers. Those are management jobs. You need someone who is focused on data, insights, trends, and understanding the member. They should not focus on TCRs or promotions, or even deposit and membership goals. Their goals are tied to the strength of the relationship as measured by products per household, length of relationship, and NPS.

Build Products For Your Market

Nothing stifles growth more than a product / market mis-match. Everyone loves a good rate, but does your target audience care? And if so, how big is it and where are they? It is vital credit unions maintain their focus on return to members (in loan and deposit rates), but in order to do that, they and the public needs to know in a sentence or two who the credit union serves.

Define your ICP (Ideal Customer Profile)

Before you can know what you need to grow and what products you need to design and develop, you have to define your Ideal Customer Profile, or ICP. Remember, this isn’t an “or” design, it’s an “and” design. We want X and we will help anyone join our credit union.

But your entire ecosystem must be designed about attracting your ICP. If you stray, get excited about things that don’t matter, or try to be all things to all people, you will be nothing to everything.

Design Products for Your Market

I’ll never forget the winter of 2023 we were only a few quarters removed from the collapses of First Republic and Silicon Valley Bank, and my credit union launched a money market promotion. It was hard to understand and a ultimately a quick play for big cash. We needed deposits and leadership had seen BMO run a similar product. The failure was being something we were not, and the branch teams knew it. Needless to say, it was not received by the market well at all. The reason is simple: It did not connect to our current or prospective members.

When products are just commodities they get treated as such. Commodities are a dime-a-dozen and don’t bring long-term value. Products should get people excited (yes, even a checking account!), but this isn’t just about deposit accounts. Your loan accounts should do the same. Just the past week we saw news about Affirm updating their approach to credit history and another credit union announcing a new cash loan focused on their ICP.

Develop Savings Programs

For illustrative purposes, imagine your ICP is middle-income consumers who want to save for their first home. Your product isn’t the mortgage; that’s the goal, they want to buy a home. The product is a savings vehicle to get them there. Of course you can market it as a package deal but the focus is on the action and support to get there. Now imagine your target is young families. Your product might be relationship-based rewards for having their checking and credit cards with you which earns them points and discounts for school, sports, and arts programs. When you lean into your target market’s goals, you will find success instead of offering a broad product in hopes the right people will come.

We are going to be seeing more and more of this over the next two years from credit unions who get it and have fully-bought into this concept of targeted product growth strategies.

Use the Credit Union to Your Advantage

Perhaps in the year 2030, consumers will understand that anyone can join credit unions. But this isn’t 2030 and a large number of potential members still believe that all credit unions are closed SEGs.

More people do have an understanding that credit unions are there to serve the community and not shareholders but the gap and apathy is wide.

As credit union leaders, we can and must do a better job of telling that story.

CUSOs Are Your Friend

It is in the name: A Credit Union Service Organization. There are CUSOs for nearly every credit union need: Marketing, payments, member onboarding, and strategic support, just to name a few.

This is nothing against going to other companies to support your credit union — I certainly have throughout my career — there are times it makes sense to. But also, this is a call to remember these organizations were created to support and level-up the credit union movement.

Your Brand is Your King

Above all else, when it comes to credit unions, your brand is your king. You have a built in story about working for the community you serve and it is built into your by-laws.

In this fight, you are not alone. Every other credit union operates with the same ethos and answers to the same neighbor.

Check out this short video from First Commonwealth Credit Union showcasing how targeted financial education can change a community. First Commonwealth has invested in this strategy, used it to define their brand, and showcase and continue to invest in their community.

Recently, CU Insight wrote about how some credit unions have focused their message around belonging in the Hispanic community. But it goes beyond that as everyone belongs in a credit union.

Banks are great at leading with product and getting consumers to “feel” something. Credit unions actually feel something and have to work harder to ensure the public understands the value of the credit union; to their neighborhoods, their sports teams, their food banks, their libraries, and themselves.

Invest Strategically in AI

There is a lot of noise across the world of AI these days. Every week a new model is being released by one of the Big 3 AI companies and now Meta has Muse and consumers and businesses alike are overwhelmed. It is tough to cut through the noise and easy to get lost in all the shiny objects in the world of AI.

AI is like the technology implementation that the more you get into it the more complicated it becomes. For a credit union, it starts with governance rules and structure, then aligning on strategy and use cases (AI can’t solve everything), then expanding and growing its smart and safe use.

That is easier said than done, but if you don’t begin now, you will likely never catch up. There is much AI technology can do for credit unions of all sizes, but it starts with setting up the framework, naming the human responsible, and empowering the organization.

There is no better time to invest in your credit union; in talent, in strategy, in focused initiatives to prepare this industry for prime growth. There are headwinds to be sure; big banks continue to invest and some FinTechs are gaining charters and coming after your accounts. Make no mistake about it.

But credit unions have something all of them don’t: The people, the community, and the vision of a better and brighter tomorrow.