Shrinkage in Numbers But Not Assets According to
Shrinkage in Numbers, But Not Assets § According to the National Credit Union Administration (NCUA), there were 5, 964 federally insured credit unions as of the end of Q 2 2017, a decrease of 1. 3% from Q 2 2016. Total assets, however, increased 3. 8% to $1. 35 trillion. § Average assets per credit union increased 11. 3%, to $237 million, and total members increased 4. 2%, to 109. 3 million. § During July 2017, credit union memberships increased 4. 3% YOY, the fastest increase during more than a generation, according to CUNA Mutual Group, due to a robust economy. A total of 231 credit unions closed during the past year.
Attracting a Larger Share of All Loan Products § For the year ending June 30, 2017, credit unions’ total loan balances increased 10. 8%, the 4 th consecutive year of a double-digit increase. Loans at credit unions with assets of $1 billion+ increased 12. 6%; those with assets less than $20 million increased 2. 7%. § Credit union installment credit, which includes auto, credit cards and unsecured loans, increased 13. 5% for the year ending June 30, 2017. New-auto loan balances increased 16. 1% on a seasonally adjusted annual basis. § Credit unions originated $67. 5 billion in mortgages and other real estate loans during the first half of 2017, a 6. 6% increase compared to the first half of 2016. Home-equity originations were $17. 9 billion and 2 nd mortgages increased 26. 0%.
In Search of New Members § CUNA is planning a Credit Union Awareness Initiative. It says consumers have four misconceptions: a wariness of the word “membership, ” that only low-income people use credit unions, that it’s hard to access their money and that credit unions are low-tech. § According to CUNA research, consumers think credit unions are a good source for auto loans; competitive on rates; warm, friendly, and trusted; and supportive of consumers. Credit unions’ sweet spot is with parents aged 35 to 49. § On average, credit unions spent $335 per year to gain new members, with education and promotions, a 32. 9% YOY increase. Credit unions in the Central region spent $456, the highest, and those in the Mid. Atlantic spent the least, $228.
Understanding the Millennial Customer § According to a November 2016 report, onefifth of US Millennials used credit unions as their primary financial institution, 61% used large national banks and 2% used digital banks. One-third of Millennials said they were switching banks during the next 90 days. § The same report cited that although only 28% of Millennials had an auto loan and 20% had a home loan, 38% of them carried a student loan. Millennials had an average debt of $26, 485, excluding mortgages, and their average credit score was 625. § In the 18– 24 age group, 67% had credit cards, compared to 83% of 25– 34 -year-olds.
Preference for the Personal Touch § According to a Time. Trade study, members interact with their credit unions mostly in person at a branch (71%), followed by desktop/tablet, then smartphone, ATM, by phone and lastly through virtual video meetings. § While many routine banking interactions, such as checking balances or making transfers, will shift to online, members prefer to handle more complex tasks, such as applying for a loan or opening an account, to be done in person. § This preference for in-person interaction is reflected in the two top factors customers consider when choosing a credit union: member service and location/hours, followed by rates, products and services, reputation and size.
The Attraction of Member Relationships § Three-quarter of members say the main reason they visit their branch is to make a deposit or withdrawal with a teller. Some members visit for non-monetary reasons. For example, 13% visit a branch to see a notary public. § Highlighting credit unions’ member-profit sharing convinces many people to join. § The average member relationship, the amount of savings minus loans, was $18, 149 during Q 2 2017, an increase of 19. 6% from Q 2 2012. The average was the highest in the West region, $20, 649, and the lowest in the Southeast region, $16, 054.
Advertising Strategies § Highlight that credit unions pay dividends to members to promote the “co-ownership” relationship, which is an added benefit for members that other financial institutions don’t provide. § To attract Millennials, showcase low-interest credit cards and loans and proactively offer educational content, including in-person seminars and Webinars, to help Millennials build and protect their credit. § Draw a distinction between the helpful, friendly atmosphere of credit union employees compared to the less-attractive customer service of big banks.
New Media Strategies § Make sure your Website is optimized for mobile and invest in a robust, easy-to-use mobile app. § Communicate with members through periodic emails and other channels to keep them informed of the specific best-practices and technologies you are using to keep their information safe from hackers. Publish content on identity theft prevention too. § Advertise auto loans on the Websites of local car dealerships, and mortgages on local real estate Websites.
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