In her final appearance as a member of the NCUA Board, Deborah Matz said she is concerned about slow membership growth throughout the credit union movement. Membership growth was just 1.4% last year and is hovering around 2% this year, and that includes indirect lending, with which some members only have the single loan relationship with their credit union, she said.
Where is the future growth potential for credit unions, Matz asked. "You're not going to convert bank customers, and it's not right to steal other credit unions' members."
The biggest untapped market, according to Matz, is the millions of Americans who still do not have a formal relationship with a financial institution, the so-called unbanked. Many of these people are immigrants, many are lower-income people. They need services like small loans, risk-based loans because many do not have formal credit histories or may have poor credit scores. Many need financial education. "Marketing to the unbanked takes a long time. It's expensive and it's labor intensive. But it tends to pay off," said Matz, who focused much of her NCUA tenure on these kinds of issues through her series of PALs workshops across the country.
But the pay off for credit unions can be huge, primarily in loyal members. It can also pay off by helping defend the credit union tax exemption, she stated. "Congress likes to see this stuff," said Matz. "You're helping your own credit union and protecting the tax exemption."
Matz, whose term on the NCUA board expired in August, has tendered her resignation to President Bush as of Sept. 30. That will leave the three-person NCUA board with only one sitting member, Chairman JoAnn Johnson. Johnson said last week she hopes at least one of the two vacancies will be filled by the board's October meeting.
