3 Ways a Merger Can Help Your Credit Union Capture More Business

3 Ways a Merger Can Help Your Credit Union Capture More Business

An economic research by the Federal Reserve Bank of San Francisco published in September, 2011 shows that in 1969, when there were 23,866 credit unions in the U.S.A., these unions’ assets totaled $16 billion. This was equivalent to only 3 percent of assets of commercial banks and 1.6 percent of the country’s GDP. Between 1970 and 2010, there were more than 13,000 mergers such that by the start of 2011, only 7,491 credit unions were left. Interestingly, the 7,491 credit unions now had assets totaling $927 billion, equivalent to 7.6 percent of bank assets and 6.3 percent of GDP!

There is only one way to interpret these results: the 13,000 mergers had a tremendous impact on the success of the credit unions. But how?

Mergers are beneficial to both acquiring and target unions in three main ways.

1. Improved level of service

This is perhaps the biggest advantage of credit union mergers. When credit unions merge, they bring together their resources. The resulting credit union will have a wider network of offices, more access points, and improved opening hours. The benefits of such can be enormous.

If credit union A initially has 20 branches, for example, and credit union B has 5, assuming that the two credit unions have branches in different locations (which is often the case for competing credit unions), a merger will mean that members of the merged credit union have access to a total 25 locations. This instantly improves accessibility to services for members of both the acquiring and the acquired credit unions.

Table 4.1 on filene.org shows the impact of mergers on service performance scores for acquiring Credit Unions (CUs), target CUs, and merged CUs. The improvement is very clear.

2. Easier access to loans and other products/services

When credit unions merge, their range of products also increases. This is especially true for funds available for loans. In fact, most small credit unions tend to merge with larger CUs with the primary motive of providing their members with easier access to more loans at lower interest rates. The more established unions can also offer better interest rates on member deposits.

Moreover, while smaller CUs, restricted by their limited financial muscle and potential shortage of skilled personnel, may only offer checking accounts, credit cards, and auto loans, larger CUs often offer so much more. Equipped with sophisticated technology, most of the major CUs now offer mobile banking, remote deposit capture, and valuable services such as brokerage and insurance affiliates. These benefits would likely appeal to a wider spectrum of customers.

3. Improved Referrals 

Credit unions thrive on reputation. Often, when people join a credit union, they do so because they have heard many good things about the credit union. A merger can only make a stronger case for a smaller credit union looking to attract more members.

To attract even more millennials, for example, CUs need to show stability, technology savvy and prove their competence. Millennials generally want a good deal and easy banking. That’s why they often choose established credit unions. By merging with a CU that already has a good reputation, a smaller credit union can instantly uplift its status to a position where it can attract these millennials.

Acquired credit unions will likely see their Net Promoter Scores soar to new heights when they join forces with a larger highly regarded credit union.  The increased awareness and solid reputation is bound to lead to more members and more product usage.


The pitfalls in executing credit union mergers are plentiful. But we cannot give up; we must continue seeking ways to strengthen the movement. By planning carefully and involving both employees and the community, you can avoid most of the hazards and execute a successful merger that may instantly uplift your credit union in many ways.