Growth plans? Get ready for roadblocks

February 3, 2020 10:48 AM

Hoping to grow in 2020? It could be a challenge.

Throughout January, Credit Union Journal featured stories on how an evolving political, regulatory and economic landscape could shape the year ahead for the industry. CUs must content not only with the potential for shifts in how consumers view their institutions, but shrinking demand for mortgages and auto loans, recruiting struggles in a consolidating industry and more.

Read on for highlights from the January special report.

Bad reputation?

One of the biggest challenges credit unions face in 2020 could be overcoming repeated hits to the industry’s reputation that began in fall 2018 and carried through 2019.

For an industry often referred to as “the best kept secret in banking,” credit unions received plenty of major news coverage last year – and most of it wasn’t flattering.

Reputational issues are always top of mind for many credit union leaders, but they’re especially concerning in the wake of a recent consumer satisfaction survey that found banks topping CUs for the first time ever, if only by a narrow margin.

Still, there may be good news. Some sources suggested that most consumers are unlikely to remember these stories, if they noticed them at all.

For more, click here.

Crapo throws a curveball

Sen. Mike Crapo (R-Idaho) may have thrown some credit unions 2020 plans in disarray following his announcement in December opposing House-backed legislation that would help clear the way for financial institutions to bank the legal marijuana industry.

Pot banking has been a growth area and differentiator for credit unions in recent years, but Crapo's opposition to the SAFE Banking Act could slow down the number of credit unions entering the pot banking arena.

For more, click here.

Credit union consolidation by year 2010 - 2019

Getting real about recruiting

Recruiting a CEO – or any executive-level position – could be markedly harder for credit unions in 2020.

From a shrinking industry – with credit unions consolidating at an average of roughly one per day – to the best employment market in decades, credit unions could have their work cut out for them filling out the C-suite.

With baby boomers retiring and the industry holding 30% fewer credit unions than it did a decade ago, experts say this could make the year ahead one of the most challenging times for recruitment in the movement's history. And it may not get any easier.

For more, click here.

Trouble on the home (lending) front

Credit unions could see their bottom lines start to take a hit as last year's refi boom begins to simmer down.

Mortgage refinancing activity went through the roof last year after the Federal Reserve’s rate cut spree, allowing credit unions to enjoy additional income from the fees charged on refinancing home loans. With rates projected to remain low for the next few years, the question becomes how long can the industry expect the refi wave to continue?

The short answer is: it depends who you ask.

For more, click here.

CU-bank deals set to slow down

The pace of credit union-bank deals could slow down following a spike in activity last year.

Sixteen banks agreed to be sold to credit unions in 2019, representing the busiest year for such deals.

Industry experts think the volume may have peaked — at least in the near term. Push back by the banking industry, fewer willing sellers and potential regulatory intervention could all be factors, they said. And that's not even taking into account the wild card: a successful move by Colorado bankers to block a deal there that could set a template for bank trades seeking to repeat that outcome in other states.

For more, click here.

Hitting the brakes

Despite total annual sales topping 17 million for more the last several years, auto lending across the country is on the decline, meaning a key credit union revenue driver is slowing down too.

While some segments are still growing, a variety of factors could make it tougher for credit unions to see significant growth in this market in the year ahead, including dwindling market share, changing consumer preferences, longer loan terms and more.

For more, click here.