SAN DIEGO - Two leading credit union economists are cautiously optimistic credit unions will survive the tough times facing much of the economy, but urged wide use of capital and a strategic approach to serving members.
Tun Wai, director of research and chief economist with NAFCU, and Dave Colby, chief economist with CUNA Mutual Group, told NAFCU’s annual conference here they believe credit unions are in a position to not just survive, but prosper if they pursue the right strategies.
“You may have an abundance of capital, but remember, we aren’t out of the woods, yet. In this environment, prudent capital management is vitally important to the safety and future of your credit union,” Wai said. “Credit union boards must look strategically at what your members are having to deal with, determine what you can afford, then direct capital to the areas that will help you best serve those members’ needs. Just planning to spend money for service to members isn’t going to cut it. Boards have to give some thought to the growth impacts on capital, earnings and asset accumulation in determining the long-term health of the credit union.”
Colby said the 7.8% loan growth and 9.2% asset growth have put credit unions in a strong enough position to think strategically about the best ways to remain relevant to members five, or even 10 years from now.
“This is likely the most difficult economic environment that any of us have managed through. I have no doubt credit unions will weather this storm as we have previous ones, but we can’t just focus on the cycle we’re currently enduring,” Colby said. “Business as usual won’t work. We need to focus on the divergent needs and expectations of the membership. A pure depository intermediation business model isn’t sustainable. Planning for the long-term future is essential.”
Both Wai and Colby urged credit unions to strongly pursue both Generation Y, who may never think of a credit union, and older Boomers, who may retire and not think of the credit union again. With the latter, Colby recommended offering pre-retirement planning services.(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
