Navigating challenges for credit union growth
In a highly competitive and fragmented financial services market, credit unions must navigate numerous challenges to achieve growth and transformation. Velera, formerly PSCU/Co-op Solutions, in collaboration with the Filene Research Institute, surveyed credit union C-suite leaders to understand the tactical and operational barriers hindering their growth strategies.
Understanding strengths and strategic gains
Credit union leaders are acutely aware of the current consumer mindset and the inherent strengths of credit unions. In 2024, there is a concerted focus on leveraging these strengths rather than reinventing credit unions’ value proposition. About 80% of credit unions describe their strategic position as making “strategic gains,” where they identify growth opportunities but carefully select strategies to avoid overextending their resources.
However, implementing lasting change remains a significant challenge. Approximately 77% of surveyed leaders have a clear strategy and are now focusing on executing it successfully. Digital transformation continues to be a top priority, yet aligning culture, people and strategy is a persistent hurdle. Ensuring that employees possess the necessary skills and buy-in to contribute to core needs while embracing a change mindset is a continuous challenge, not limited to senior leadership but extending across all organizational levels.
Priorities for sustainable success
Credit union leaders have identified five essential areas for success in 2024:
- Skilled and engaged employees: Having the right talent is critical for executing strategic plans effectively.
- User-friendly digital experience: Providing members with easy-to-use mobile apps and digital interfaces is crucial.
- Cohesive internal culture: A vibrant culture where everyone is aligned with goals and vision is fundamental.
- Effective technology systems: Robust internal technology supports strategic objectives.
- Strong provider network: Collaborating with trustworthy partners enhances service delivery and innovation.
Successful credit unions focus on outstanding member service and a convenient experience while maintaining a growth orientation. Financial stability is not an end goal, but a tactic to sustain and scale a member-focused strategy. Among those credit unions on strong strategic footing, 31% prioritize “strong internal culture where everyone is aligned in goals and vision” as their top must-have, compared to only 6% of those with less stability.
Barriers and bridges to effective execution
Despite having defined growth strategies, credit unions face several barriers that need to be addressed in order to execute these strategies effectively. The six areas below highlight both roadblocks and opportunities for transformation:
Market knowledge
Understanding members’ needs is the cornerstone of strong member relationships. About 74% of credit unions aim to be integral to their members’ financial lives from the start. They employ various methods to gain insights, such as member surveys and analyzing account and transactional data, in order to provide personalized experiences that meet lifestyle needs and goals.
Strategic focus
Credit unions have learned that trying to serve everyone is not a formula for success. Only 44% of surveyed executives believe a diverse product set is essential. Strategic focus involves defining the purpose continuously, knowing what actions to take and when, and effectively analyzing metrics. Over 20% of leaders cite maintaining focus as their top barrier due to the diverse demands on their time.
Culture and alignment
A productive and motivated workforce relies on a strong, aligned culture that matches the strategic vision. Ninety-seven percent (97%) of credit union leaders view skilled and engaged employees as crucial, while 87% emphasize the need for a strong internal culture aligned with goals and vision. However, only half report having a very aligned organization, highlighting the challenge of achieving consistent alignment.
Product experience
While product mix remains important, the emphasis is shifting from a product-centric strategy to one focused on relationships and experiences. Leaders recognize attracting new members is less about competitive products and more about providing an excellent banking experience. Only 7% believe competitive rates and products are key, whereas nearly half focus on delivering a superior basic banking experience consistently.
Technology stack
Technology investments are critical enablers of strategic goals, such as operational efficiency and personalization. Top planned investments for 2024 include marketing technology (64%), payments (59%) and data analytics (58%). Almost all credit union leaders (90%) identify mobile app and digital experience as essential for success. However, the key to leveraging technology lies in designing it with the member experience in mind, ensuring it enhances engagement and satisfaction.
Partnership ecosystem
Credit unions increasingly depend on third parties for sophisticated products, services and strategic insights. Seventy-eight percent (78%) of credit union leaders consider a strong provider network essential for success. Effective partnerships offer more than just products; they provide collaborative support, data-driven insights, new perspectives, and complementary skills. Leaders seek flexible, open infrastructure and integrations to support strategic goals, with an emphasis on reliable execution, service excellence and proactive communication from partners.
Transforming barriers into bridges
To thrive, credit unions must invest internally, focusing on people, cultural alignment, and operational efficiency. Addressing these areas forms a solid foundation for tackling technological and strategic challenges. By leveraging strong partnerships for aspects like product development and technology, credit unions can concentrate on enhancing internal capabilities, turning barriers into bridges for sustainable success and growth.
