Watch: Credit Union Leaders Share What's Ahead in 2021
Facing unprecedented challenges and change last year, credit unions stepped up to meet the moment. Pivoting in remarkable ways, they focused on what they do best - implementing innovative programs to help members survive and thrive. And by many recent reports, credit unions succeeded financially too. So now that we’ve passed the one-year mark and are entering a new phase of the pandemic, how are credit unions doing? And what are the challenges they’re facing and opportunities they’re looking forward to in 2021?
Recently, Credit Union Times Editor-in-Chief Michael Ogden checked in with Mike Dill, EVP – Chief Lending Officer at Royal Credit Union, and Todd Marksberry, President/CEO at Canvas Credit Union to get their thoughts and discuss what they’re focused on for the rest of the year.
Reflections From Last Year: Resilience and Accelerated Innovation
Both credit union executives kicked off the roundtable by reflecting on 2020 challenges and defying the Covid-19 slump. Todd said, “Overall, we’re doing great. Last March, we had to get 600 employees up and running from home, re-opened all branches by May, and finished out the year by surpassing all of the forecasted goals from deposit growth to ROA.” Mike echoed the positive assessment and said, “The team was resilient and pivoted quickly to help members. Like Canvas, we exceeded our goals and saw an acceleration in innovation.” Anecdotally, we’re also seeing credit unions take steps to become more agile and leapfrog innovation.
Key Challenge: Addressing Loan Growth Pressure
While the outlook is upbeat, there are challenges, including increased loan deposits and the pressure for loan growth. CUNA has estimated that credit unions held $1.66 trillion in savings in February, 19.6% more than they held a year earlier. The gain of the previous 12 months ending February 2020 was 9.1%. Surplus funds (cash plus investments) rose 48% to $653 billion as of Feb. 28, an increase of $210.5 billion over the previous 12 months.
Mike said, “This is a big issue for us and we’re kicking around a lot of different technologies and strategies, including loan promotions and loan pool buying.” Todd added, “We have diversified our portfolio so we have a lot of levers to use, from indirect auto lending to mortgages to consumer/business lending, and will be pushing the gas on the indirect side.” Both unanimously agreed that for those credit unions that haven’t diversified, now would be a good time. Equally as important and critical to success on the indirect lending side, they recommended making investments to have a strong infrastructure in underwriting, loan origination, and loss mitigation.
Main Focus: Member Experience
When the conversation turned to areas of focus, it became clear that putting members at the center of their digital strategy remains a top priority. Todd said, “For the first time in five years, we added a new strategic pillar focused on member ease of use. We want to make it easier for members to do business with us.” The audience was in agreement. During an audience poll, 45% of participants indicated that the member experience impact would be the most important factor when evaluating new technology.
Conclusion: Be Bold
As credit unions prepare for the next phase of the pandemic, they’ll need to keep innovating and leveraging new technology to meet member needs. Millions of americans are turning to credit unions for their cooperative model and personal touch, so there is an immense opportunity for credit unions to help members, increase membership, and grow portfolios safely. As the two executives reflected on lessons learned from last year, Mike offered this piece of advice for credit unions going forward, “Even when it’s challenging, there are opportunities. So, it’s about having the attitude and fortitude to take risks and be bold.”
