CFO Focus: Three ways credit unions can prepare for liquidity challenges

Develop robust practices now to set up your credit union for long-term financial stability even in a tough lending economy.

Financial institutions across the nation are bearing the brunt of an unstable economy—and liquidity challenges have taken center stage in the minds of industry leaders. With high interest rates and fear of a looming credit crunch growing, institutions must find ways to unlock liquidity and support sustainable growth.

In today’s environment, no financial institution is immune to liquidity challenges. However, credit unions and regional banks face more obstacles than the big banks, as larger banks typically operate under more stringent risk management guidelines that account for periods of restricted liquidity. Larger financial institutions also tend to have access to more diverse funding sources.

Yet despite the inherent challenges they face, credit unions can achieve liquidity resilience by prioritizing process efficiency and leveraging their member-centric approach. With these priorities and the right asset/liability management strategy in place, credit unions can navigate liquidity challenges while continuing to provide consumer-friendly services and rates to their members.

How to navigate liquidity challenges

During periods of restricted liquidity, some credit union leaders may assume the best option is to restrict lending. However, it’s important to recognize that reestablishing a strong lending presence can pose an even greater challenge than navigating liquidity hurdles.


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