6 Trends That Shaped Credit Unions in 2019
As 2019 draws to a close, it’s important to look back on where we’ve been in order to plot a course ahead. Businesses in the financial sector are always facing a variety of disruptions—now more than ever. From disruptive technology and shifting government regulations to changing inflation rates and new economic policies, things are never static for credit unions.
The following are some of the credit union trends that marked 2019:
1. Industry Numbers
Generally, the industry did very well in 2019. Industry-wide, the return on investment was 9.6% up from 2017 and 2018. On top of this, net worth was 11.3% this year.
Large credit unions grew much faster than small credit unions, in terms of both assets and membership. This is due to regulatory costs and technology trends. Larger credit unions have a return on assets (ROA) about twice the rate of small credit unions. As a result of these trends, many smaller credit unions have merged into larger credit unions.
2019 continued a common trend: credit unions and small community banks have much better customer engagement than large and regional banks. The most successful credit unions draw on a number of strategies in order to boost engagement. Methods include focusing on making a good impression, communicating clearly and frequently, and focusing on personalizing service wherever possible.
4. Industry Share
In 2019, credit unions’ share of the auto loan market was higher than the historical average, though down from the previous year. The same goes for mortgage lending.
Growing competition from non-traditional lenders—the Fin Tech market—was a big deal in 2019. Companies such as PayPal, Rocket Mortgage, and Lending Club focus on the same traditional markets as credit unions.
Nobody is surprised that technology continued to be a big trend in 2019. Credit unions should be thinking about using technology to improve the overall member experience, including mobile banking. They should also focus on connecting technology among multiple branches and other channels.
Data analytics is also a key item in this area. Many credit unions began to use data analytics to influence their customer strategies in 2019. Big data and analytics are creating a competitive advantage for the organizations that choose to use them.
6. Loans and Shares
Loans and share deposits rose up 6.5% and 6.0%, respectively, industry wide. However, both of these numbers are lower than the 2018 levels. Likewise, membership growth is up 3.7%, down from 4.3% in 2018.
Loan originations were down 2.5% from 2018, while home equity loans were up 7.5%. Loan yields grew faster than despoil account rates. Loan-to-share ratios averaged 83% for 2019, up from 2018.