One of the key ways that smaller institutions can cope with rising costs and pressures, suggests Tansley Stearns, chief impact officer at Filene Research Institute, is through "collaboration" with other credit unions – instead of an actual merger.
Such collaborations could involve a multitude of cost-saving arrangements – including, for example, having two companies share an IT expert; having multiple credit unions share health care costs for employees; or sharing other resources, like back-office operations.
"They don't necessarily have to partner with a credit union in the same geographic region, they could collaborate with credit unions across the country," Stearns said.
As for growth, Streams cited a Filene report, "Credit Unions: Financial Capability and Scale," that found "On average, larger credit unions are far more likely to meet our conditions for financial sustainability than smaller credit unions. However, credit union performance varies greatly within each credit union asset size range. Thus, asset size plays a key role in explaining long-term trends in credit unions' performance, but is not an insurmountable determinant for each individual credit union."
The study also recommended that credit unions should not grow too fast, nor grow too slow – hence, suggesting that while growth in asset size is important for the viability of a credit union, it must be a managed, controlled kind of growth.
