Interest rates are up, banking brand trust is down, and credit unions need to concentrate on making 2024 a year of innovation and growth. To get there, prioritizing loan growth and digital optimization will play a crucial role in setting credit unions apart from — and ahead of — their banking counterparts. 2022 was all about the pending liquidity crisis and 2023 has had financial institutions knee-deep in how to turn the crisis around. It’s no longer a question of “how do we prepare for this” but instead “how do we grow from this.”
Inflation and interest rates have soared this year, hitting some of the highest numbers we’ve seen in over 20 years. While the Federal Reserve has slowed rate increases for 2023, all financial institutions have a long road ahead of them. Actively preparing for what’s next should be at the top of every credit union’s Q3 and Q4 list, as next year’s strategy will look dramatically different from years past. But one thing remains the same, everyone needs liquidity.
If you are a credit union preparing for your 2024 strategic plan, here are three key drivers to consider during the process.
#1: Develop core deposit strategies
Thanks to low rates on home sales and refinancing, loan growth had been exponentially strong in prior years. Now, credit unions need to prepare differently for the road ahead as growth may be closer to single digits instead of double. The spread between interest income and interest expense continues to narrow and credit unions should keep a keen focus on the pricing of loans and deposits. Participation loans can provide excellent opportunities to diversify portfolios, boost your bottom line, and help mitigate the effects a recession has on the institution. By chipping in on these pools of loans, your credit union can benefit from flexible loan growth and grow loans with low credit risk and above-average yields.
continue reading »