Step Back, Then Forward: Caution Over Short-Term Thinking

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ARLINGTON, Va.-In planning for 2011, credit unions must pay more attention to the shifting financial business model as opposed to getting hung up on all the threats to revenue.

NAFCU President Fred Becker is concerned that credit union strategic planning this year could focus on the short term. "It is easy to get hung up on overdraft, interchange, and all the various regs as opposed to taking a broader perspective and asking 'what do all these issues added up mean for my credit union? And how do I, if at all, change the business model going forward?' "

Becker told Credit Union Journal that CUs need to step back and peer over the horizon at what could become of the credit union business model.

"The regulatory and legislative environments, and consumers, are putting pressure on all facets of the operation. And that pressure is going to change the business model going forward. You have demographic and cultural change. The workforce is more diverse than ever. Coming out of the Great Recession are people-especially the next generation-going to be savers rather than borrowers? And you have increasing applications of new technology. As I look over the horizon I see the real possibility of a very different financial services landscape in which change will be exponential and ever more volatile."

As an example of how quickly change can arrive, Becker pointed to the fact that today some credit unions are paying members to withdraw their deposits. "Three years ago, who would have thought that would be happening?" Becker said. "It would have been considered heresy."

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