5 reasons why now is the best time to be a small credit union

There’s a story out there if you Google it, about a small credit union that one day found itself facing a decision many – if not all – small credit unions face. Merge with a peer to form a larger organization, get swallowed up by a bigger financial institution, or forge a new, independent path?

For this credit union, which saw its loan volume dwindle as consumers opted to secure auto loans from dealers rather than the credit union, forging a new path and remaining independent was the way to go. It gathered its best ideas and got innovative, eventually offering a new auto loan product for consumers who either didn’t bank or were underbanked.

Five years later, its assets have grown from $12 million to $20 million. And there’s little to say the credit union can’t go further.

Get innovative or go home

Ask if it’s a good time to be a small credit union, and it is possible they’ll tell you it’s the best time to be a small credit union. New and matured technology offers efficiencies for small financial institutions that help them remain nimble and stay competitive.

But it’s not just technology that makes the difference. Here are five reasons why today is the best time to be a small credit union:

1. Evolving technology allows for strong system utilization

Technologies exist today that allow small credit unions to contend in what is becoming an increasingly competitive financial services industry. Even with limited funds, when compared to larger financial institutions with deeper pockets, smaller credit unions can make strategic decisions about the software solutions in which they invest, in turn, creating leverage peers and competitors may not enjoy.

To do so, small credits unions need to ask if their solutions can expand into other departments. If so, they may enjoy faster implementation, a smaller user learning curve and quicker ROI.

Can one platform replace more than one outdated system, reducing maintenance costs and the overall IT stack? With the right enterprise information platform, it’s possible.

2. Your (one person?) IT department can achieve the impossible

What makes small credit unions such a tough competitor in today’s market is staff willingness to find workarounds to problems to get the job done. That innovative, can-do attitude is better served when a single solution can give your guerilla IT department the tools it needs – like rapid application development – to solve critical business needs.

3. It’s easier to develop a ‘relationship management’ culture

Larger financial institutions work hard to build a bridge between IT and their lines of business. It is a struggle, even for community-based financial institutions.

Only 30 percent of FIs consider the IT/LOB relationship “excellent.” But if you can marry those two departments, it is worth the effort. The closer IT and the line of business work together, the better the bottom line.

To create a spark, consider reframing the idea that IT exists only to implement new software and fix broken technology. Rather, show your staff IT exists to build business solutions that benefit everyone. With a smaller staff than the larger competition, credit unions have an edge.

4. Small credit unions can seize the day and redefine agility

When applied to a smaller financial institution, some people equate “agility” with speed. Or they think of it as a euphemism for a small staff that must wear many hats to keep the credit union up and running.

Nothing could be further from the truth. Smaller credit unions have the opportunity to redefine the term as discipline, especially when it pertains to technology processes and operations.

Sometimes, tension in smaller credit unions swirls in the front and back office, with technology in the middle of it all, especially as it pertains to missing documents, change requests and document prep. Smaller credit unions can curb that tension quicker and easier by strengthening internal commitments (agreeing on the business commitments executives and managers owe one another), adapting external innovations (building relationships with peers to learn and adopt business solutions), and nurturing deep knowledge in critical areas (identify who needs to fully understand certain disciplines, like mobile payments).

5. Insane member loyalty may never go away

Credit union members are among the most loyal customers any business can have. Also good news, young professionals are discovering how loyal credit unions are to their members, too.

Credit unions experienced a 3 percent growth in Millennial customers in 2016, according to Accenture. And credit union members who consider themselves “highly loyal” are nearly twice as likely to go to their credit union for checking, online banking, mobile banking, home equity or a second-mortgage loan, and first mortgage loans, according to CUInsight.

Can larger financial institutions say the same thing? When 59 percent of Millennials say they would or are very likely to leave their bank for something as simple as a false decline, it’s difficult to say they can.

By redefining how they work, what products they offer, and the technology they use to put it all together, small credit unions are poised for continued – independent – growth. Which means it really is the best time to be a small credit union.

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Michelle has expertise in the financial services industry and has been a contributor to the Hyland blog.
Michelle Harbinak Shapiro

Michelle Harbinak Shapiro

Michelle has expertise in the financial services industry and has been a contributor to the Hyland blog.

... read more about: Michelle Harbinak Shapiro