Once again, we have reached that stage of the calendar year. Along with cooler temperatures, shorter days, and planning for the holiday season comes a focus on 2024 and predictions for the year ahead.
If you are expecting prophetic statements regarding the Super Bowl, the stock market, or the Powerball, I’m afraid you will have to look elsewhere. The focus of my crystal ball is strictly some happenings we might see concerning the ever-evolving credit union industry.
More investment funding in the credit union space, along with increased private equity activity, will lead to an environment with a focus on proactive, not-for-sale opportunities. This in turn will amplify the importance of players in the CUSO and fintech world as proactive searches and proprietary deal flow needs accelerate. If the Q4 interest our firm is getting is any indication, 2024 transaction and deal announcements will be bountiful.
Building a strong digital-based solution set for members’ demands will require new technical and technological partnerships. This is vital in the quest to stay relevant and attract new members. Consequently, I think you will see even more development regarding CUSOs and fintechs as components of growth strategy.
Of course, you can’t spell “inevitable” without “A” and “I”, and that’s exactly what artificial intelligence has become. Each day it is becoming more impactful in both our personal and professional lives. In 2024 AI will continue expansion in the credit union industry through chatbots and other member service-focused features, allowing employees to concentrate on more complicated tasks. AI as a tool for sorting, analyzing, and interpreting data will help create a more accurate and seamless underwriting process. It will also be invaluable in terms of security as a countermeasure to increasingly sophisticated cyberthreats.
Your local credit union branch you could walk into just a few years ago would be nearly unrecognizable today. As brick-and-mortar locations decline in number, those that remain will continue to adapt to be more nimble, offering additional ‘life stage’ advisory services (think wealth management and insurance), and technologically focused. Advanced self-service kiosks with video ATMs and interactive teller machines (ITMs) that interface with mobile apps will soon be commonplace, particularly in remote and off-site locations.
2023 has been a year when the powerful term “inflation” dominated the economic landscape. Four rate hikes by the Federal Reserve drove interest rates to their highest point in over 20 years. This had major impacts on consumer savings and spending, credit cards, investments, mortgages, and lending. While the new year may bring additional fluctuations in interest rates, ripple effects from this year’s increases may take a while to settle.
I am fairly confident in my prediction of contraction and expansion in two key areas for 2024. Contraction of credit unions through M&A will continue as innovation and tech make scale a distinct competitive advantage. At the same time, many credit unions will expand their marketing outreach through social media and digital channels in an effort to attract (and retain) new members from the millennial and Gen Z demographics.
So, as we prepare to consign 2023 to the vault of history and open a new annual account, there will be no small number of both challenges and opportunities for credit unions and those they serve. As far as predictions go, it is always best to be mindful of the old financial adage, “past performance is no guarantee of future results.” But in the context of the season, I prefer the more poetic version expressed by that famous financial analyst of the Victorian era, Ebenezer Scrooge. “Are these the shadows of the things that will be, or are they shadows of the things that may be only?”