It’s unlikely any credit union anticipated how 2020 would unfold, but the year’s many challenges underscored the importance of planning. The industry has had to navigate many turns during the year, but it still delivered value to members at an unprecedented level. Credit unions could not have accomplished such a feat without the shared purpose, goals, and plans developed by leadership teams across the country.
In 2020, members have deposited more of their savings into a credit union than in any prior year. In fact, the growth is more than double that of one year ago. What’s more, members are leaning on cooperatives for credit, too.
In 2019, credit unions set a record pace for loan originations through the first nine months of the year. Today, loan originations are an astounding 25% higher than then. Historically low rates are driving record mortgage lending for refinances and home purchases, but consumer lending is also growing. Business lending, too, is on a record pace thanks in part to the industry’s support of small businesses and participation in the Paycheck Protection Program.
Members are looking to manage cash flow amid economic uncertainty, and credit unions are coming through for them. But how has the credit union system delivered such results during the most challenging operating environment in a lifetime?
One key factor to success certainly lies in the industry’s ability to adapt to changing conditions. Although it wasn’t a flawless transition for all organizations, credit unions pivoted their operations to a remote work environment with amazing speed and success as the pandemic unfolded in March. They activated previously developed and tested business continuity plans and continued to serve members, who often were learning new ways to access their credit union’s products and services.
The rapid transition to a remote environment could not have been accomplished if credit union staff members had not continued to focus on member needs. Within the movement, credit unions waived fees, launched loan payment deferral programs, and provided resources to support members during a time of stress and uncertainty. Within individual shops, employees quickly shifted responsibilities with branch staffers helping handle call center volume and consumer lenders helping process mortgage loan applications.
Even while remaining focused on members, though, credit union leaders have put the wellbeing of their employees at the forefront. The movement’s support and gratitude for financial first responders has never been greater than during a year that will be remembered for its pandemic, calls for social justice and inclusion, hurricanes and wildfires, and an extended, tense election. Flexible schedules, days off for mental health, surprise recognition for work, and enhanced employee assistance programs are just a few of the steps credit unions have taken to support their employees.
A credit union’s culture is evident in times of change and crisis. The fact so many took the time to ensure their employees were in a position to serve members has been essential in the year’s success. Credit unions do not exist without members, but leaders recognize they need to support employees to enable employees to support members.
Credit Union Strategic Planning Themes
Callahan has the privilege of facilitating dozens of credit union planning sessions every year. In keeping with the times, almost all the sessions this year were virtual. Although participants certainly missed the social connections that develop while being together in person, the sessions were still thoughtful, engaging, and productive — another testament to credit unions’ ability to adapt.
Given the upheaval of 2020, are credit unions thinking differently about their future? For the most part, no. The year served to validate the pillars of credit union strategic plans. Those pillars — which often revolve around delivering value to members, developing employees, and supporting communities — are even more relevant in challenging times. That said, the year’s events certainly shaped where credit unions invested and how they prioritized their initiatives.
The pandemic created economic challenges that are leading credit unions to devote more resources toward members’ financial wellbeing. Although a growing number of credit unions have focused on this in recent years, the sudden reduction in income experienced by many households, compounded by uncertain support from government programs, underscored the importance of credit unions in members’ lives. Credit unions now have the opportunity to reinforce their role as a trusted financial partner as members look for paths forward.
Credit unions are also investing further in digital capabilities. The pandemic closed branches, and members learned to access products and services through alternate channels. Call center volume increased, but even that experience changed as some credit unions increased their video capabilities to ensure more personal interactions. Likewise, some credit unions deployed ITMs, which offer greater capabilities than ATMs with a more personal touch. This year demonstrated the importance and value of online and mobile access, and credit unions are looking to enhance these channels in 2021.
Credit unions are working with employees, members, and their communities to improve diversity, equity, and inclusion. Although many credit unions have long participated in DEI activities, the events of 2020 have provided new insight into the importance of diverse perspectives in increasing the impact, reach, and effectiveness of the credit union’s products, services, and partnerships. Positions and committees responsible for creating change are being elevated to direct CEO-reports with the goal of making DEI part of the everyday fabric of the movement.
Finally, the year has presented many challenges, but new opportunities have emerged, too. Credit unions are forming new partnerships that reflect the year’s events as well as strengthening existing partnerships to increase their reach within the communities they serve. By aligning with organizations that help advance their missions, credit unions are amplifying their impact across the country.
“Credit unions that know who they are and what they are striving to achieve respond more quickly and purposefully than those whose vision is less clear.”
Each of these areas of strategic focus are tied to the purpose of the credit unions that put them at the forefront. These credit unions often have a clarity of purpose that all levels of the organization understand. Credit unions that know who they are and what they are striving to achieve respond more quickly and purposefully than those whose vision is less clear — that’s a key takeaway from 2020. Plus, these credit unions are better at communicating who they are to their employees, members, and the community and thus better at differentiating their institution from competitors.
Pivoting To 2021
Credit unions are positioned for an even more remarkable 2021. Unforeseen challenges will surely emerge, but credit unions are at their best when times are tough. Cooperatives are designed to go against the grain, move toward challenges, and serve members even when the market forces others to pull back.
For credit unions, opportunities emerge from adversity. When banks retreated during the Great Recession, there was a backlash by consumers. But credit unions continued to invest in members, which paid off throughout the 2010s — the greatest period of growth in credit union history.
Nobody wants to see the challenges of 2020 continue, but credit unions are ready to serve as a new decade begins. The industry remains well capitalized, earnings are lower but remain solid, and, most importantly, credit unions are focused on member needs. Reflecting on 2020 is important as we head into a new year, and doing so with plans that have an eye toward the future will drive further industry success.
Callahan Can Help With Your Next Strategic Conversation
Whether its traditional strategic planning or a strategy-based discussion, Callahan combines years of industry experience with data-backed insights to bring your credit union a fresh perspective. Learn how we can help guide your credit union’s strategic plan in a virtual engagement in 2021.