The Big Get Bigger

In a tumultuous digital financial landscape, today’s credit unions are better positioned than ever before.

Memberships are on the rise as more and more individuals seek alternatives to the traditional, monolithic banking institutions of the past. Credit unions add a more personal, more local touch, while their non-profit status adds to the interest level of increasingly savvy digital customers searching for an organization motivated less by short-term gains and more by good customer service.

As membership climbs, credit unions are seeing incredible deposit growth. As shown in the chart below, over the past five years organizations have seen $258 billion in new deposits.

But you would be mistaken to assume increased credit union growth helps everybody equally. Not every organization is getting an equal share of this bonanza.

The credit union industry has continued to mature, and during the past five years the lion’s share of credit union growth has added to the ledgers of the biggest credit unions. As shown in the chart, the spoils have gone specifically to those with a sweet spot of $1+ billion in assets.

During the current five-year period, billion-dollar companies make up only a small percentage of the total credit union marketplace. But future predictions show the big credit unions will only get bigger, with an average of $2 billion in assets becoming the new standard for tomorrow’s credit unions.

Your credit union leadership is faced with one unavoidable fact: the big are getting bigger, while smaller credit unions will continue to face a declining share of the market.

Like any company, a smaller credit union has a tougher time in a competitive market for common-sense reasons. Marketing, compliance and technology are cost structures that greatly benefit from scale, making a larger company naturally more robust.

But even with those natural benefits, your executive leadership might be averse to increasing credit union growth by pooling resources with another company.

Click Here to Download White Paper “Growth by Merger”

To assuage unfounded fears, you may want to consider that a credit union merger looks nothing like the typical acquisition you read about on Wall Street. When two non-profit organizations come together, we seldom see many losers and usually find a whole lot of upside.

The unique structure of a credit union puts individual members in the same role as shareholders in a traditional bank. So instead of enriching the already-rich, a credit union merger most benefits the members themselves, the communities they live in, and even the staff of the organizations.

The new, stronger credit union enjoys more capital thanks to a swollen membership roll, while also enjoying better rates, more technology, a wider variety of branches, and easier access. This leads to even more members, creating a game-changing climb to new levels of credit union growth.

The employees on the other side of the equation have just as much to be happy about. The same number of members collectively in the new organization will require the same number of representatives to maintain service, while gaining other efficiencies will mean better pay, better benefits and more opportunity for those employees.

If you have discounted the idea of a merger, now might be the time to dust it off.

A properly done merger can be all upside, provided you carefully research the merger and consult knowledgeable sources. With credit union growth on the upswing, now is the time for your leadership teams to ensure your company is getting a fair, lasting share of the pie.