Credit Union Mergers Enhance Members’ Financial Lives

A white paper recently submitted by students of the Southeast CUNA Management School, “Perceptions and Realities Surrounding Credit Union Mergers,” has revealed some interesting research and analysis in support of the mergers and acquisitions trend that’s been experienced by the credit union industry in recent years.

Although much support can be found in favor mergers on behalf of the businesses, not much research has been conducted from the member perspective. This white paper explores this unique member perspective, examining 1,249 survey responses received from members of six recently-merged credit unions. The respondents provided a deeper understanding of members’ overall satisfaction of their credit unions during and post merger.

Does a Properly Executed Integration Affect Member Satisfaction?

The students’ survey revealed 62% of their respondents were satisfied with their credit unions since the merger. Interestingly enough, 52% responded with neutral or negative affect when asked if they felt membership service had improved since the merger.

The study points to proper execution as the key to a successful merger. A positive experience will only be felt by members if efforts are made to relay the positive nature of the transaction, rather than leaving people to feel restless and unsure of the future.

Credit unions who actively engage in marketing efforts during the acquisition period will generally experience a satisfied membership base. CUs must focus stringently on communication efforts with their members in order to keep them apprised of the changes and help them understand the benefits that will be achieved as a result of the transition.

A successful merger needs a great team of people from various aspects of the business to ensure the members feel supported, appreciated, and valued.

What Does the Future Hold?

Mergers will continue to be a vibrant, strong part of the credit union economy. As members become more reliant on enhanced technologies for their everyday lives, smaller credit unions may find it hard to keep up with costly changes necessary to compete.

As phrased by the authors of the paper, “…merging with a larger institution allows the smaller counterpart access to a superior pool of resources, which tends to create a ripple effect. These resources allow for heightened marketing efforts as well as access to modern technologically-induced efficiencies, and typically results in amplified managerial expertise.”

Click Here to Download White Paper “How Mergers Help Small CUs”

Besides the obvious, tangible products and services credit unions are able to offer their members post-merger, other benefits are likely to be realized, as well. When economies of scale take over, for example, the burden of regulatory costs can be dispersed more evenly, and cause a less burdensome impact, on larger credit unions. Smaller credit unions, however, will continue to struggle under the ever-present weight of the regulatory burden.

Throughout the industry, the average asset size of credit unions continues to increase. If mergers and acquisitions continue to enhance the average asset size of credit unions at the current rate of growth, the average credit union will have nearly $2 billion in assets in about 20 years.

How are Millennials Contributing to Credit Union Changes?

Millennials are making a major push in today’s market. This now-adult generation was the first to be born fully-immersed in technology and immediate gratification. As such, credit unions are being challenged to integrate advanced technologies and incorporate conveniences and enhancements, which were previously not viewed as necessary.

As Millennials become the main force of the economy, small credit unions may experience further struggles in terms of providing the technology and other elements expected by this interesting generation.

Credit unions that are considering a merger should rest assured that, when executed properly, their members will experience overall satisfaction. Mergers can provide members with technology and other opportunities that may not otherwise be available, thus increasing loyalty and ROI for the CU. As always, the key to success lies in strategizing and navigating the business into the best possible position