How credit unions can grow membership amidst liquidity challenges

It’s no secret that more and more credit unions are facing liquidity challenges – many are loaned out with more low yield, longer-term assets on the balance sheet than they might want during a period in which interest rates have risen rapidly. At the same time, consumers are spending more on products and services during a time of high inflation, and, as a result, are increasingly tapping into their personal savings. All this has left many institutions in greater need of deposits. With limited liquidity and growing concern about rising delinquencies, many lenders have opted to pull back on consumer lending. Yet, many consumers are in need of affordable credit, particularly when it comes to personal loans to pay down rising credit card debt and meet their everyday needs.

According to Experian, the number of personal loan accounts has increased by 16 percent over the past year, mostly driven by borrowers looking to consolidate their debt to combat inflation.1 As loans and investments come to maturity and liquidity increases, personal lending can offer returns as high as 9 percent while representing a unique opportunity for credit unions to gain new members and build new relationships.

Additionally, as member-owned institutions, credit unions strive to continue lending in order to support their communities. According to Callahan and Associates, credit unions have continued to lend and even increased lending during the Great Recession – “In times of economic shrinkage and recession fears, the credit union mission becomes integral to the financial wellbeing of existing and potential members. The objective to reach those who are most vulnerable to economic shocks has helped keep member-owners — as well as credit unions themselves — more resilient in the long term.”2 As banks continue to pull back on consumer lending, credit unions have a unique opportunity to compete and gain market share while adding new members in their time of need.


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