LOMBARD, Ill.-Due to a projected sluggish second half economy and the Consumer Financial Protection Bureau's focus on overdrafts, credit unions need to use the next six months to begin creating new revenue streams.
That's the forecast, and advice, of Bill Handel, VP of research and development for Raddon Financial Group, who emphasized that the CFPB has said the "dirty word-'overdrafts.' Credit unions must start now thinking about how they will reduce their reliance on overdraft revenue."
Handel believes CUSOs over the next several years will play a much bigger role within the industry, allowing more credit unions to expand and diversify into investment and broader insurance services. "We will see CUSOs buy more traditional full-line insurance agencies. A property/casualty line is an ongoing annuity that is difficult to become unprofitable."
Credit unions, Handel expects, will begin to shift CD deposits to the investment side of the business, assisting both members and the CU.
As Handel forecasted, the economy's slow 2.2% first quarter GDP growth will drop in the second half, ending at 1% to 2% GDP growth for the entire year. A modest decline in unemployment won't really help, as Handel expects the drop to come from people who have given up looking for work. CU loan growth may tick up slightly, mainly in consumer lending due to rising auto sales. Real estate lending will still be refis, primarily.
