The Questionable Future

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If nothing is certain except death and taxes, how can credit unions be expected to plan for the future? In this, the second part of a two-part series, The Credit Union Journal asked several experts to offer some insight into what is to come.

As founder of, Glen Hiemstra said that to understand and plan for the future, start off by looking at some of the trends that are already becoming clear right now, such as demographic data.

'On Our Way To 37 Floridas'

"One such trend is one I think people generally know about but is still generally underestimated is the aging of the population," he explained. "It's not just a matter of the Baby Boom population getting older, which has focused our attention on this trend. It's the fact that people are generally living so much longer than they used to. We are on our way to having 37 Floridas in the U.S. Fifteen years from now we'll see state after state with a quarter or more of their populations made up of people 65 and older."

When you couple that aging of the Baby Boomers with the relatively small size of Generation X, it's easy to see why some experts are predicting a shortage of workers, particularly young, well-educated workers, he suggested. "Look for that in 2010, and it could put a lot of stress on wages and credit union will have to look at how to retain good employees," Hiemstra offered. "But that assessment assumes that people will continue to retire at 65 or younger, and that's just not what's happening ither because they have to or they want to, people are working longer, and that could help blunt the worker shortage. But again, credit unions will have to rethink some of their employment strategies."

Innovations in technology will continue to shape the world-and how credit unions serve it.

"Contrary to the common feeling that the World Wide Web was fun but now that has burst, I believe we are still in the early stages of a data flow society," he commented. "That's why Generation Y is so interesting to me. For every major technological innovation, it takes the generation that grew up with it-the generation for whom that technology just always existed-to fully embrace it and use it to its greatest extent. The kids born in the early 80s and onward have always had a computer and don't remember 'before the Internet.' I have kids in this generation, and they cringe at the thought of having to go into a building to do a financial transaction. Technological revolution isn't just about the technology, it is partly a generational change, and that's why it always takes longer than people expect."

Closer to credit unions, CUNA Economist Bill Hampel offered some insight based on interest rates.

Challenging Rate Predictions

"I generally avoid making predictions and try not to get nailed down, but once in a while so many things come together that something is incredibly likely to happen, and this is one of those times," he said. "The last 15 years have been a bumpy ride downwards for interest rates, and even though there have been some ups as well as downs, it's generally been moving down, and that has built up a bias for refinancing. In the next 10 to 15 years, mortgage rates will be at least flat and probably slightly up, and we won't have that built-in bias favoring refinancing. I say this with confidence because mortgage rates can't go much below 2%, and then only if the 10-year Treasury gets to 0%, and that's just not going to happen."

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