ARLINGTON, Va. — The best growth bets for 2014 may already be in your credit union's backyard.
That's according to representatives for several credit union trade associations, who said that all the new members CUs garnered over the last two years can still be turned into more profitable members.
"A lot of credit unions have done a really good job of diving into their own backyard and trying to grab more wallet share, and training staff to cross market," said Dan Berger, president and CEO at NAFCU. "I think there's going to be a good opportunity in 2014 with interest rates likely to continue to tick up, and that creates refinancing opportunities, in terms of new loans or refinancing existing loans."
Chuck Fagan, CEO of the Credit Union Executives Society (CUES), concurred that 2014 will be the year of digging deeper into existing memberships. "That products-per-member, whether it's getting a credit card or securing that checking relationship, those types of things are really, really going to fuel the growth as we look through this year."
Fagan said that while CUs have seen massive membership growth during the past two years, "with a lot of those new members, we haven't formalized that relationship yet to get some of the core products in their hands. I think that low-hanging fruit of building deeper relationships on a lot of those members we've gotten over the last couple of years is huge."
A number of sources told Credit Union Journal that they believe there are big opportunities for credit cards in the new year. Fagan noted that as CUs convert to EMV — a switch that may be accelerating as a result of Target's card data breach late last year — they have a great opportunity to grow their base of cardholders by emphasizing the up-front nature of CU credit card pricing along with the security of EMV-enabled plastic. (See related story on page 1.)
Refi Boom Over, On To Durable Goods
CUNA's chief economist, Bill Hampel, was one of many who told Credit Union Journal that while the mortgage refi boom is essentially over, improved economic forecasts and consumer confidence have created big opportunities for consumer lending.
"Members and potential members are going to be looking around for places to borrow for consumer purchases much, much more over the next year than they have for several years," forecasted Hampel, emphasizing the importance of being out in front of consumers with those loans, as well as getting to them before the competition. "From an economist's perspective I can't say how to do that, but the biggest potential growth area for credit unions this year is consumer loans."
The economist said that while in normal economic conditions consumers might turn to home equity to finance the purchase of durable goods, many consumers still haven't regained all of the equity they lost during the financial crisis. But with equity still slowly creeping back to previous levels, consumers may be more likely to take out loans for durable goods, rather than relying on home equity.
NAFCU's Berger said that the new year is likely to see a continuation of many trends from 2013, along with "guarded optimism" that the economy will continue its slow but steady improvement.
The most successful CUs in 2014, he said, will be the ones that leave no stone unturned. "Looking at new mortgages, new business loans, refinancing autos and mortgages — looking at everything," he said. "Looking for aggressive marketing strategies for credit and debit card usage. The ones that are successful are having multiple marketing channels and multiple product lines."
