Why the status quo must change – what banks can learn from credit unions

by: David Gibbard

Credit union membership declined from June 30th 2013 to June 30th 2014 at 54% of all credit unions, according to NCUA data.  Median credit union membership was also down.

0.4%. for the same period. Overall credit union membership grew 3.7%. Also, during the same period the NCUA approved 234 credit union mergers and 20 were closed by NCUA supervisory action. The number of credit unions is reducing by about three to three and a half percent a year.

The primary reason cited for credit union mergers according to the NCUA is to offer expanded member services.  U.S. financial institutions under a half billion dollars in assets have a difficult expense and income challenge, due in most part by non-existent economies of scale. As margins shrink, the mega banks get more efficient and technology demands and expenses increase, this challenge is going to become even more difficult to manage.

A look inside these numbers reveal what most industry analysis have been saying, the large get larger and the small are getting smaller.

Membership in credit unions with assets:

  • Over one billion dollars grew 6.2%
  • Between half billion and one billion grew 4.3%
  • Between 250 million and 500 million grew 1.5%
  • Between 100 million and 250 million grew 1.4%
  • Less than 100 million shrank by half percent.
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