2023 had its share of challenging industry trends to tackle … and 2024 will too. But by staying in the know at the beginning of the year, your credit union can plan to overcome any challenges that await you.
Here are four credit union industry trends to be aware of as you stare down the next 12 months.
- A complex economy
The economic situation will likely remain a thorn in credit unions’ sides in 2024. S&P Global notes a real mixed bag of factors, including:
- Gradually lessening inflation
- Slower GDP growth
- Potential rate cuts
- Depreciation of the US dollar
- Leftover headwinds from years of economic whiplash
Members and potential members will still feel economic pressure in 2024, so targeting those pain points and offering relevant solutions is still as important as ever. If inflation and rates do drop as S&P predicts, that may be a good moment for timely loan promotions … but count on people to stay cautious when it comes to spending.
What if you’re loaned out? You can use this caution (in combination with inflation drops) to try luring deposits to your savings products.
- AI shenanigans
You’re probably as tired of hearing about it as I am, but (like it or not) AI isn’t going away.
The largest banks are now employing AI systems. Bank of America has Erica. Capital One has Eno. And Santander has Sandi. But it’s worth saying these systems aren’t foolproof, and the Consumer Financial Protection Bureau (CFPB) worries about AI misleading consumers or violating compliance legislation.
Your credit union likely won’t have an AI bot on the scale of those megabanks. Still, you’re implementing AI in other ways – chatbots, phone systems and so on. The megabank-CFPB story reminds you to use automation cautiously.
Yes, convenience is good … until it compromises member relationships. Remember chatbots, phone trees and more can frustrate consumers. Don’t sacrifice your brand reputation at the altar of AI.
- Banking across the generations
Generational differences continue to perplex many credit unions while being key to the industry’s future at the same time. Disturbingly, the average member age is ten years older than the U.S. national average age (which is around 40 years old).
That’s flat-out unsustainable.
Credit unions must continue pursuing Millennials and Gen Z to reverse the industry’s top-heavy, reverse pyramid age structure. Stop delaying the digital reformation. And really understand what these folks want. For example, many want online options for day-to-day banking but physical locations for big financial moves. Knocking down branches won’t earn you points with these groups.
But remember: Dance with the one who brought you.
Your current average member age suggests many members are Gen X. This group earns large incomes and faces many financial challenges of their own. Bankrate says 60% of Gen X individuals claim money worries harm their mental health (higher than the younger generations).
Continue targeting Gen X with your products. Don’t leave them behind as you “get younger.”
- The investment dilemma
A recent article found a good number of 2023’s merged CUs had “net worth ratios north of 30% or even 40% saying they lacked technology, while never explaining why they chose not to reinvest some of that capital into things as simple as websites.”
Hoarding your capital is a powerful temptation … but it won’t keep your credit union safe. Invest your capital in improving your institution. Invest. Not “spend.”
Not every expense is a loss. If invested wisely, your outflows effect gains in the future. Use your extra capital to:
- Redesign your website
- Train your staff
- And more
Your capital has been an umbrella of protection in the past. Now, use it as a sword and attack your credit union’s shortcomings.
As you will see, 2024 will have its challenges … but it’ll also have its successes. Arm yourself with this information, find help if you need it and get out there and conquer the market. Now’s the time to take your credit union to the next level!