Analyst Points To Demographic Trends CUs Should Watch

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Credit unions were told they need to be listening to the "alarms" that are sounding when it comes to demographic trends and opportunities.

Specifically, one person is cautioning, the fact most adults are leaving their prime borrowing years and entering a stage where they will need a new mix of products and services that is different from what most credit unions have on the menu.

Speaking to the Floyd Forum Leadership Conference here, Vicki Joyal, vice president, research services with CUNA, based her findings on CUNA's Credit Union Environmental Scan (E-Scan) findings. The forum was hosted by John M. Floyd & Associates.

"Alarms should be sounding in credit unions across the nation. You are clearly facing both challenges and opportunities," Joyal said. "The average age of adult credit union members has increased from 40 to 47 during the past two decades."

That adult has "left his prime borrowing years (25 to 44). In 2003, nearly 36 million people age 65 and over lived in the U.S.-just over 12% of the population. The Baby Boomers (born between 1946 and 1964) start turning 65 in 2011. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 71.5 million-nearly 20% of the population."

According to Joyal, that trend will force credit unions to ask, "Do we have the right mix of products and services?" "Do we have the right facilities? Convenience may take a whole other form. Are employees trained to meet the needs of seniors?"

She also noted the growing need to accommodate older workplace employees. "There are four generations in some workplaces. They care for children and parents. Flexibility will be key," since many want to phase into retirement, to have eldercare, long-term care and health insurance. "Only 8% of credit unions now have retiree health insurance."

On the opportunities side is the rapid growth of the Hispanic/Latino market, poised to grow by 75% in the next 25 years. "If you're looking for new, young members, look to Hispanics/Latinos. This 'unbanked' segment definitely needs financial services. They are taking money home and putting it under their mattresses," Joyal said.

Joyal told credit unions that home buying among immigrants will fuel increases in home ownership rates. "Offer a first-time homebuyers program or affordable mortgage program," she recommended. "They lack closing costs and down payments," which can be covered by federal programs. "But they can make the monthly payments."

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