Now’s The Time To Do (Measurably) Well And Good

Surging credit union metrics combine with startling measures of Americans’ financial woes to paint picture of opportunity and challenge.

Credit unions are doing well. But are they doing enough good? Record shares and loan levels show the industry has perhaps never been stronger, but some other metrics show that the challenges facing the people credit unions exist to serve are actually greater than ever.

Consider these sobering stats from multiple authoritative sources, including the Fed:

  • Americans are carrying $12 trillion in debt.
  • 75% of Americans are living paycheck to paycheck, including 33% earning $75,000 or more.
  • 47% of Americans can’t come up with $400 in an emergency.
  • The average household with debt owes $15,600 on credit cards.
  • Unbanked households will spend $40,000 in their lifetime to cash checks.

Now, add this:

America’s credit unions now hold $1 trillion in shares.

  • They have 102.5 million members. Out of a total population of about 321 million.
  • They originated $200 billion in loans in the first six months of 2015, another record.
  • They held an 8.5% market share in new mortgage originations, another record.
  • All asset peer groups posted double-digit YTD loan origination growth.

That last bullet bears expanding on: There is no statistically significant relationship between asset size and key growth metrics. Those figures are from Callahan’s Trendwatch 2Q2015.

Those two sets of facts above paint a picture of both opportunity and responsibility.

Credit unions have a mission, to serve their members and people of modest means. Traditional performance metrics don’t really measure that. They are more aligned with the interests of equity stockholders, says Jon Jeffreys, Callahan’s managing partner. We’re hearing more and more CEOs asking a simple, but challenging question, When we look at our performance, are we really measuring the right things?’

This unparalleled strength in our industry in breadth and depth presents a unique opportunity for the credit union movement to make a lasting impact on the financial well-being of its members and their communities.

Indeed, that emerged as a key topic of conversation at a meeting this summer of senior credit union executives working together to develop cooperative ventures to further credit union innovation and collaboration.

Imagine if credit unions didn’t compete with banks based on the number of branches, the number of ATMs, or no-fee checking accounts, but rather on the number of financially healthy members.

Here’s what they’ll be working on; you’ll be hearing more as these ideas become actionable strategies:

  • Communicate and demonstrate the value of financial management to the financially unhealthy.
  • Develop and deploy accessible, affordable savings and credit vehicles that bring financial stability to households.
  • Address the challenge of Americans’ ability to meet small financial emergencies.
  • Provide a path for long-term financial health via savings options.

Given the unhealthy financial state of so many Americans, Callahan sees financial health as a major opportunity for the credit union movement over the next decade, Jeffreys says.

Imagine if credit unions didn’t compete with banks based on the number of branches, the number of ATMs, or no-fee checking accounts, but rather on the number of financially healthy members, Jeffreys says. It’s a long road until a credit union can say 100% of its members are there, but the first step is an accurate assessment of your members’ current financial health.

Yes, indeed. Credit unions are doing well. Now we need to make sure we’re doing good.

August 20, 2015

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