Top 10 Strategic Planning Trends
The future looks to be increasingly mobile.
As you create strategies and goals to guide your credit union into the future, consider how these 10 trends, from the 2013-2014 CUNA Environmental Scan, might alter the course you set:
1. Mobile payments are growing at a 68% annual growth rate—from $16 billion in 2010 to a projected $214 billion by 2015. It has been called the single greatest opportunity—and threat—for credit unions.
This is a new ballgame. Members used to come to credit unions for cash and credit union-branded checks or plastic cards.
But members won’t be coming to the branch for their mobile payment branded devices. Instead, mobile payments will come down to access, not devices.
The challenge will be to retain your members in a mobile-payments world.
2. Mobile banking. Consumers expect to be able to access a variety of financial products and services from their mobile devices with ease and reliability.
There will be an estimated two billion active smartphones worldwide by the end of 2013, according to Deloitte. Mobile banking has gone from cutting edge to mainstream faster than any other financial innovation.
It’s quickly becoming a basic expectation, especially among younger consumers.
But there’s a downside, and it involves…
3. Mobile malware. With the rapid proliferation of smartphones and the explosion of downloadable applications, it was only a matter of time before malware started targeting mobile devices.
That time has arrived: Trend Micro estimates the number of malicious Android apps will hit one million in 2013.
Your credit union will have to invest more in mobile malware detection and prevention to keep up with increasing threats. Educating members about how to protect themselves from mobile malware also should be a priority.
4. Credit union lending is expected to grow 5.5% in 2013 and 6.5% in 2014. Credit unions finally report rising loan balances after three years of negligible growth due to an improving economy, rising consumer confidence, and declining household deleveraging.
Credit unions can expect growth in auto loans, credit cards, and purchase mortgages due to pent-up demand created by the recession. And a 3% to 5% increase in home prices over the next year should increase demand for second mortgages and home equity loans.
It’s time for loan underwriters and loan officers to get out of a recessionary mind-set and think proactively about growing loan portfolios.
5. Credit union earnings will be meager. Average return on assets will fall to 0.75% in 2013 and 2014 from 0.84% in 2012. A 10 basis point (bp) decline in net interest margins will be partially offset by a 5 bp decline in loan loss provisions.
The Federal Reserve’s policy of maintaining low interest rates will maintain downward pressure on credit union net interest income for the next two years. With asset yields falling faster than funding costs, interest margins will fall from 2.93% in 2012 to 2.8% in 2013—the lowest on record
NEXT: Unite for Good
6. Unite for Good. The credit union movement has identified a strategic vision to help all credit unions achieve shared goals. It’s a vision based on the shared values of collaboration, a member-centric focus, community involvement, and a dedication to consumers’ financial well-being.
The shared vision is: Americans choose credit unions as their best financial partner. To achieve this, the credit union movement must embrace a strategic vision called “Unite for Good.”
Visit the Unite for Good website for a checklist of action steps to help realize these goals.
7. Unbanked and underbanked consumers represent the last remaining “white space” in financial services—an uncharted territory where credit unions have a rare opportunity to serve an underserved market.
Approximately 68 million U.S. adults are either unbanked or underbanked. Revenue from serving unbanked and underbanked consumers totaled $78 billion in 2011 and will hit $85 billion in 2012.
8. The compliance burden will only get heavier in the coming year. In fact, 2013 will be busier than 2012 with the onslaught of new Consumer Financial Protection Bureau (CFPB) mortgage rules.
Your credit union should develop a compliance management system to address this overwhelming workload. CUNA and the leagues offer some helpful guidance on doing so.
9. CEO succession planning is becoming a top priority as the economy recovers, retirement savings rebound, and more CEOs retire. If your credit union has a succession plan (and two-thirds do), it’s time to review it to make sure it’s still relevant.
Succession planning is more than replacement planning. It’s a way to ensure the continuity of your credit union’s performance and culture.
CEO succession planning requires proactive management. Determine the scope of your succession process, and then assemble the players and define their roles to begin rolling out your process.
10. Gen Y and low awareness levels. Attracting the 100 million members of Gen Y will go a long toward determining credit unions’ future viability. To do that, we’ll need to raise Gen Y’s awareness of credit unions.
CUNA research from April 2012 shows that 48% of nonmembers ages 18 to 24 are “not at all familiar” with credit unions. Another 23% are “not very familiar” and 23% are “somewhat familiar.” Only 6% are “very familiar.”
To attract and retain Gen Y, credit unions need sophisticated mobile services, an effective social media strategy, and clear communication about their not-for-profit, cooperative business model.
STEVE RODGERS is editor of Credit Union Magazine.