November 20, 2023
Recently, Ron Draper, CEO of Somerville’s Credit Union and Chair of the Cooperative Credit Union Association, shared valuable insights for credit unions in an episode of the 22 Minutes in Lending podcast.
In the fast-paced world of lending, collaboration becomes paramount. Credit unions, big or small, can’t be everything to everyone. Strategic partnerships, alliances, and collaborations with Credit Union Service Organizations (CUSOs) are essential for survival. This collaborative approach fosters resilience and adaptability in an ever-changing financial landscape.
Talent acquisition poses a significant challenge for smaller credit unions, leading to concerns about the viability of these institutions. The root cause, in my view, lies in the absence of robust succession planning. Small credit unions, like mine, must make a compelling case for working in the credit union sector. By showcasing the intrinsic rewards and benefits of credit union employment, we can attract and retain the talent needed to thrive.
Liquidity and deposit growth have taken center stage, driven by fluctuating interest rates and increased competition. While larger credit unions may turn to institutions like the Federal Home Loan Bank, my credit union has explored collaborative efforts with Credit Union Service Organizations (CUSOs) and other credit unions for access to secure lines of credit. It’s a delicate balance, ensuring that our members receive competitive rates while maintaining our institution’s financial stability.
The implementation of CECL has reshaped how credit unions project losses on their portfolios. While the upfront impact on capital can be significant, leveraging modern tools like Cecil Solver has allowed my credit union to navigate this shift efficiently. Moreover, prudent participation in loan programs, like those facilitated by LendKey, provides valuable historical data for informed decision-making.
Embedded finance emerges as a pivotal force reshaping the credit union landscape. As financial services seamlessly integrate into everyday experiences, credit unions must adapt to this shift. Embedded finance isn’t just a trend; it’s a strategic imperative. By meeting members where they are – on digital platforms, e-commerce sites, and ride-sharing apps – credit unions can enhance member satisfaction, stay competitive, and thrive in the evolving financial landscape.
In the realm of cybersecurity, vigilance is non-negotiable. Cyber threats are omnipresent, requiring a multi-faceted approach. From internal education and awareness to outsourcing cybersecurity services, credit unions must be proactive in safeguarding their members’ sensitive information.
The journey of a credit union leader must meet these challenges with resilience, strategic foresight, and a commitment to meeting the evolving needs of members. As credit unions embrace collaboration, talent development, technological advancements, and cybersecurity measures, credit unions can chart a course toward a robust and sustainable future.