We don’t want to grow just for growth’s sake
It’s a comment I almost always hear during strategic planning sessions, and it reveals a potentially disastrous mindset. Growth isn’t an option to consider, but a necessity to start planning for now.
The long history of credit union consolidation, illustrates the difficulties credit unions face if they do not achieve the scale needed for sustained success. Ever increasing competition from larger credit unions and banks, and a proliferation of fintechs will make the future even more challenging.
No credit union is entitled to its members.
Healthy credit union growth is tied to a continued relevance in a marketplace where members are increasingly presented with a wider, more far-reaching selection of competitive options.
Like any other business operating among other competing organizations, a modern credit union has only two directions: up or down. Growth provides the path up, while anything else results in stagnation and irrelevancy.
So let’s rewrite that statement to more accurately represent the real issue.
“We need to direct our growth in the most strategic way possible.”
When decision-makers express concern about “growth for growth’s sake,” often what they really mean is growth without direction. Direction is absolutely a necessity when positioning your credit union toward a potential partnership.
Gone are the days where two failing credit unions could simply throw their memberships together to make a more competitive whole. Unless they can bring actual value to the table, the resulting partnership is doomed to lackluster performance at best.
A good partnership matches up expanded fields of membership, expanded markets, more branches and better benefits. It fits a plan of continued growth that not only takes into account the first merger, but looks to the future competitive landscape and anticipates other potential partners down the road.
Credit unions have continued on an unwavering road of consolidation since the ’70s. The rate has only increased, especially moving into the information age. Using the CUNA’s statistics, the number of existing credit unions has dropped from 10,624 in 2000 to 6,009 as of June 2016.
Tomorrow the world will have room for even fewer credit unions than we have today.
The big are only getting bigger.
Imagine the average credit union being $2 billion in assets. If we continue at the current rate of credit union consolidation and industry asset growth this future will be here in 20 years.
Our research, as illustrated in this infographic, has shown larger credit unions have better financial metrics and thus able to provide better benefits to both members and employees.
As credit union leaders we must continually question how our credit unions are positioned to compete in the hyper evolution of the financial services market. Emphasis needs to be placed on building economies of scale and developing a brand awareness and preference that will fuel continual growth.
Growth is the key to a thriving credit union.