I recently spent some time catching up on the latest industry insights here on CreditUnions.com, specifically regarding the strategic priorities guiding credit union executives as they continue through 2026 and beyond. It’s clear that while the specific technologies change, the fundamental question keeping credit union leaders up at night remains the same: How do we stay relevant in an increasingly crowded landscape?

That question is one I’ve spent the better part of my career answering. My perspective was shaped first from the inside as an industry sales executive, and over the past decade, as a co-founder and partner of Arriba Advisors. During my time on the vendor side, I realized my true calling lived beyond just managing tech and that my passion was advocating for the financial institutions that serve as the backbone of our economy. I saw firsthand how often credit unions were at a disadvantage.

Current industry analysis points toward two clear priorities for 2026: a growth mindset and a sharp tech focus. I couldn’t agree more. But after a decade of helping financial institutions negotiate more than 2,000 contracts, we’ve learned you can’t achieve one without mastering the other.

Growth Mindset Needs A Modern Engine

There is a major emphasis right now on organic growth through digital channels. This is the right move, but the fact is, a growth mindset is only as effective as the core that powers it.

If your growth mindset is being held back by a legacy core or a digital banking suite that feels like a relic of 2016, you’re fighting an uphill battle to not only attract new members but also retain current ones. Many executives believe they are too locked into their current situation or that a full core processing evaluation is too strenuous to undertake.

I won’t sugarcoat it: the evaluation process is strenuous. Identifying the right technology partner requires a deep dive into functional requirements, future scalability, and cultural alignment. However, it is also the only way to ensure your digital transformation creates a seamless member experience.

The process is crucial to identify a technology partner that can actually enable your specific strategic goals.

Tech Focus: The Hundred-Vendor Web

The second priority often discussed today is a refined focus on technology, specifically regarding fintech partnerships and AI enablement. The common challenge is determining where technology creates real value.

From my perspective, the challenge is also how you manage the complexity of those choices. Today, a credit union with less than $1 billion in assets often oversees between 100 and 300 different vendors. That’s an enormous portfolio of contracts, renewal dates, pricing structures, and performance obligations.

And, most of those vendors negotiate these agreements every day; your team does not. This is where the balance of power can quietly shift.

Now more than ever, vendor contract negotiation is about ensuring that when you commit to a technology partner, the terms of that relationship actually reflect your institution’s leverage, your goals, and your long-term interests. We know where vendors have room because we’ve sat on that side of the table.

Real value is only realized when the contract protects your interests, ensures service-level accountability, and provides an exit strategy that doesn’t feel like a ransom.

How Credit Unions Level The Playing Field

The current roadmap for credit unions demands the right technology, the right partners, and the right guidance. At Arriba Advisors, that’s precisely what we provide through partner-level engagement and a track record of more than 2,000 negotiated contracts representing millions in annual value.

The roadmap is in front of you. We’re here to help you execute it.

Tom Russell is a co-founder and partner at Arriba Advisors, a strategic advisory firm that helps credit unions optimize member experience and achieve sustainable growth. With deep industry expertise, Arriba Advisors guides financial institutions through technology assessments, vendor evaluations, contract and price negotiations, and much more Contact him at trussell@arribaadvisors.com.

The post Growth Is A Mindset, But Success Is In The Contract appeared first on CreditUnions.com.

No longer solely a back-office issue, fraud attacks against credit unions are becoming faster, more technology-enabled, and more pervasive across all member touchpoints.

As digital capabilities advance, institutions must view fraud within a broader risk management framework, especially as financial crimes grow more scalable and irreversible, with schemes like business email compromise, cryptocurrency fraud, identity theft, and lending scams exploiting speed, anonymity, and control gaps.

But there’s also a way credit unions can protect themselves: by implementing practical solutions to counter threats. These include proactive approaches based on internal controls, training, monitoring, and governance, along with identifying weaknesses and addressing them before they can be exploited.

Barry Pelagatti, a partner in RKL’s Audit Services Group and leader of its Financial Services and Risk Management Service groups, shares insight from his 30 years of experience helping financial institutions across the Mid-Atlantic strengthen controls, respond to evolving threats, and manage risk in a practical, proactive way.

How does RKL support credit unions in preventing, detecting, and responding to fraud and identity theft?

Barry Pelagatti: RKL supports credit unions in designing risk-based plans focused on preventing, detecting, and responding to fraud and identifying theft by emphasizing strong internal controls, data protection, access management, security awareness, and incident reporting.

Internally, we focus on safeguarding sensitive information through restricted access, password controls, secure data storage, device security, ongoing training, and prompt reporting of lost devices or suspected unauthorized access.

These same practices help us support credit unions as we work with them to strengthen fraud prevention, improve detection of suspicious activity, and respond quickly to potential incidents.

What are the key fraud trends you’re seeing today, including some recent data and the rise of cyber-enabled and cryptocurrency-related schemes?

BP: Fraud trends today show that financially motivated crime is increasingly digital, fast-moving, and scalable. The FBI Internet Crime Complaint Center’s 2024 Report shows the Internet Crime Complaint Center has received approximately 836,000 complaints per year on average during the past five years, reflecting the persistent nature of online fraud. The report also highlights that cyber-enabled fraud accounted for roughly 38% of 2024 complaints but nearly 83% of total reported losses, with approximately 333,981 complaints and $13.7 billion in losses.

Investment scams were the largest category by reported loss at about $6.57 billion, whereas business email compromise caused roughly $2.77 billion in losses. Cryptocurrency continues to play a major role due to its speed, pseudo-anonymity, and limited recovery options, with more than $9.3 billion in losses in 2024.

Common payment channels include cryptocurrency, wire transfers/ACH, debit and credit cards, peer-to-peer payments, and gift cards. Overall, fraud is becoming more technology-enabled, more cross-border, and harder to reverse once funds leave the victim’s control.

How are fraud schemes evolving, and what should credit unions know about identity theft risks, modern scam tactics, and loan fraud red flags?

BP: Fraud schemes are evolving by blending traditional deception with modern technology, social engineering, and increasingly realistic fake documentation.

Identity theft remains one of the fastest growing crimes, with fraudsters targeting personally identifiable information such as Social Security numbers, addresses, driver’s license numbers, email credentials, insurance data, and loan information.

Tactics include phishing, spear phishing, vishing, smishing, pharming, skimming, mail theft, pretexting, typo-squatting, and whaling. Newer scams like “pig slaughtering” involve building trust over time before steering victims into fake investment platforms, often involving cryptocurrency.

An important takeaway is that scams are no longer always crude; fake websites, executive impersonation, and AI-assisted document creation can make fraud attempts appear legitimate. On the lending side, red flags include unusually large loan requests, questionable repayment terms, inconsistent or forged documentation, discrepancies in personal information, frequent applications, and reluctance to provide supporting details.

What practical steps can credit unions take to strengthen fraud risk management, including detection methods, internal controls, employee training, and overall risk strategy?

BP: Credit unions can strengthen fraud risk management by starting with a formal fraud risk assessment that identifies vulnerabilities, measures risk, and connects those risks to specific control activities.

Strong internal controls are foundational, especially since fraud often arises from control weaknesses. Key measures include segregation and rotation of duties, mandatory vacations, surprise audits, employee account reviews, and background checks for higher-risk roles.

Maintaining a confidential reporting system allows employees, agents, and the public to report concerns without fear of retaliation, which is critical since tips are a leading method of detecting fraud. Continuous monitoring, including automated tools, helps ensure controls are working as intended.

Employee training should be mandatory and ongoing, covering fraud awareness, warning signs, reporting procedures, and consequences. Targeted, frequent, recurring training is especially important for high-risk functions.

At a broader level, organizations should align fraud management with governance, oversight, and a prevention-first strategy, as prevention is generally more effective than recovery after losses.

To learn more about RKL, visit the firm’s website and follow RKL on Instagram, Facebook, X, and LinkedIn for updates on services, insights, community involvement, and career opportunities as well as information about RKL’s mission and values.

The post Fraud Is Faster, Smarter, And Harder To Stop. Here’s How To. appeared first on CreditUnions.com.

St. Cloud Financial Credit Union ($430.0M, Sartell, MN) has quickly evolved from early adopter to advocate when it comes to digital assts.

The Minnesota-based cooperative has built a core-integrated digital asset vault, connected to multiple blockchain networks, and even launched its own stablecoin. But CEO Jed Meyer is quick to clarify this isn’t about chasing crypto because it’s new and buzzy.

“We never set out to be a trailblazer,” he says. “We always start with our member and work outward.”

This time, it started with a market penetration problem.

In 2019, the credit union had roughly 23,000 members in a market of 200,000 people and nearly 40 competing financial institutions. Through strategic planning sessions, two priorities emerged: to better serve underserved populations through customized products, and to understand where member money might be going next.

That second priority led the credit union to digital assets.

“We were seeing some deposit outflows,” Meyer says. “Not a ton, but enough to ask, ‘what are we going to do?’”

In 2023, approximately $1 million in deposits flowed from St. Cloud Financial to exchanges. In 2024, that number jumped to $15 million.

“That’s a 15x trend of liquidity outflows,” Meyer says.

Across the industry, the CEO estimates roughly 3% of deposits might already be leaving for digital asset platforms with no guarantee of return.

“With every innovation in the past 100 years, we were still needed at some point in the lifecycle of the dollar,” Meyer says. “This is the first time that might not be true. When a dollar leaves me for the DeFi space, there’s never a need for a centralized ledger ever again.”

According to Gallup, one in seven Americans reported owning cryptocurrency in 2025. For St. Cloud Financial specifically, Meyer says 16% to 25% of its members either already have or are showing interest in digital assets.

“Relevancy always equals ROI,” he says. “I’m more interested in plugging the hole in the bottom of the income boat than I am worrying about future dollars.”

Education Before Execution

Before building anything, St. Cloud focused on understanding the space.

The CEO says it’s difficult to find education materials, so the credit union helped foster the Minnesota Crypto Council, a nonprofit focused on education for members, staff, and the broader community. For four years, the organization has hosted quarterly sessions, developed training materials, and brought in subject matter experts.

That education-first approach proved critical not just for adoption but also for addressing skepticism.

“When you launch something like this, you have to speak to the 50% of your membership that doesn’t want it,” Meyer says. “This is optional. We’re not forcing anything.”

Industry peers might be even harder to convince. A fall 2025 report from American Banker found the majority of the banks, credit unions, and payments companies it surveyed remain in the discussions and learning phase. The uncertainty around regulations has slowed adoption, and one of the most common arguments against digital assets is its association with volatility and fraud.

Meyer flips that framing.

“What risk have I actually taken?” he asks. “Other than human capacity and time spent, what risk have I taken?”

In his view, the greater risk lies in waiting.

“I actually think people who say, ‘I’ll get to this in five years,’ are taking the risky position,” he says.

What Came First — The Vault Or The Coin?

Although much of the industry conversation has centered on stablecoins, St. Cloud Financial took a different path with the launch of its CU-Digital Asset Vault in March. Initially envisioned as a digital version of a safe deposit box, it quickly evolved into foundational, core-integrated infrastructure. Rather than building a single product, the cooperative deployed a core-integrated digital asset framework developed by DaLand CUSO – Coin-2-Core – capable of operating across multiple financial rails, from traditional payment networks to blockchain-based systems.

“The vault acts as a vault, but really it’s a switch,” Meyer says. “It turns my core into the wallet. It turns my core into the node. It allows me to plug into any DLT [distributed ledger technology] money network.”

At a structural level, the credit union designed the vault around member ownership, employing a self-custody model where members retain control of their digital assets while the credit union facilitates storage and movement. This is in line with the current regulatory environment, where full custody authority remains an area of ongoing clarification. Rather than push ahead in a gray area, Meyer says St. Cloud Financial has spent years engaging regulators at both the federal and state levels, including ongoing dialogue with the NCUA and the Minnesota Department of Commerce. In the meantime, the vault serves as both a practical member tool and a strategic bridge, connecting digital assets back to the cooperative’s core system without overstepping regulatory boundaries.

With the infrastructure in place, launching a proprietary stablecoin became possible. Although that was not originally a main objective of the strategy, a use case convinced the credit union to proceed. Two national food co-ops approached St. Cloud Financial looking for a settlement solution aligned with cooperative principles.

“We offered them USDC,” Meyer says. “They said, ‘We’re a cooperative, you’re a cooperative. We want a cooperative stablecoin.’”

Thus, St. Cloud Financial introduced the Cloud Dollar ($CLDUSD) in late 2025, making it the nation’s first credit union-issued stablecoin.

Still, Meyer cautions against overemphasizing this aspect of the technology.

“In five years, we’ll look back and say that was a small sliver of what we were actually talking about,” he says.

Don’t Stop Here. Stablecoins and digital assets have moved beyond “wait and see” into active development. For a look at both the risks and the opportunities in this next phase of financial services, read “What Should Credit Unions Know About Stablecoins?” only on CreditUnions.com.

Slow Rollout, Strong Signals

St. Cloud Financial has taken a measured approach to rollout.

Following an NCUA audit in late 2025, the credit union launched a friends-and-family pilot in December and expanded to full membership in March. Today, the credit union holds approximately 15 Bitcoin in its system and between 50 and 75 vaults in progress.

So far the most notable insight isn’t volume, Mayer says, but member behavior, especially among younger demographics.

“When they open a vault, they bring everything with them,” he says, indicating it’s been a way to deepen relationships and increase products per member. “We’ve been told, ‘Finally someone is listening to our generation and what we believe our wealth will be.’”

Consumers are already in the cryptocurrency space, and Meyer urges industry peers not to outsource those members.

“You worked hard for those relationships,” he says. “You cannot continue to give your relationships away to third parties.”

An Uncertain Timeline

Crypto is only the beginning for St. Cloud Financial. The same infrastructure that supports digital assets today could eventually handle tokenized financial instruments, identities, and other forms of value.

“This is going to be bigger than a product,” Meyer says. “It’s going to be bigger than one innovation.”

The CEO expects the traditional finance and digital asset ecosystems will coexist and, ultimately, St. Cloud’s strategy is less about predicting the future and more about preparing for it.

“If this takes another seven to 10 years, I’m okay with that,” Meyer says. “If this happens tomorrow, I’m okay with that.”

For credit unions, the question isn’t whether to launch a stablecoin or offer crypto trading. According to Meyer, it’s whether they will have a role in a financial system where money can move, store, and grow entirely outside of them.

“Our only play is to establish ourselves as the access point, the aggregator point, and the trusted advisor point,” he says.

The post A Credit Union Journey Into Cryptocurrency And Stablecoins appeared first on CreditUnions.com.

In this environment, traditional risk tools alone aren’t enough. As digital lending scales, portfolio protection must evolve to meet members within the lending experience itself.

What’s Changing In Borrower Behavior?

Economic pressures are reshaping how members approach borrowing and how confident they feel in their ability to repay. The TruStage 2025 Consumer Lending Preferences Research highlights this strain:

• Borrowers feel increasingly financially fragile.
  • 91% worry that a life event could impact their ability to make loan payments.
  • 73% have experienced at least one financial hardship.
• Repayment anxiety is becoming universal.
  • Eight in 10 consumers are worried about their ability to make their loan payment.
  • Rising inflation, income instability, and higher household debt loads are intensifying this concern.
• Demand for credit remains strong, despite stress.
  • Six in 10 Americans say the current economy makes them more willing to take out a loan for a major purchase or unexpected expense.
• Members want protection built into the lending experience.
  • 70% are more open to credit union payment protection than in prior years.
  • 96% prefer to learn about payment protection before finalizing a loan.

These shifting expectations set the stage for a thoughtful approach to mitigating risk while helping members feel supported and confident.

Why This Matters For Credit Unions

Missed payments are rarely the result of unwillingness to repay. More often, they’re triggered by short‑term disruptions — job loss, illness, injury — that affect multiple aspects of a household’s finances at once. Traditional credit indicators may not capture these real-time stressors, leaving both borrowers and lenders exposed.

Credit unions can protect members and strengthen portfolio resilience by embedding safeguards directly into the loan journey, along with continued face-to-face discussions with loan officers.

The Integrated Protection Approach

When lenders integrate payment protection in the loan workflow and include payment protection in the loan app, members gain confidence at the moments that matter.

In our research, 74% of borrowers said they expect more than one opportunity to learn about payment protection across the loan journey. With a multitouch, multichannel approach, you’re able to reach members when and how they prefer to learn about and consider this protection.

Embedded insurance for lenders is designed to help reduce delinquencies by giving borrowers a safety net, yet it avoids disrupting approvals or elongating cycle times. Think of it as portfolio resilience for lenders through a better member experience.

By presenting options seamlessly, lenders can improve conversion rates without the feel of an add-on sale.

Operationalizing It — Without Slowing The LOS

Credit unions can incorporate consumer loan protection solutions effectively by using user interface (UI) patterns that feel native to the loan origination system (LOS). Best practices include:

• Contextual prompts during pricing and terms review that explain how coverage helps mitigate loan default protection risks.
• Clear, plain‑language disclosures that build trust and support financial health protection.
• Real‑time selection and instant confirmation so protection carries through automatically.

The Leadership Opportunity

Today’s borrowers expect transparency, stability, and personalized support. By embedding payment protection insurance into your digital lending journey, you can help protect members from the financial stress they worry about most. It’s a practical way to keep credit flowing, maintain member trust and scale with confidence.

Learn how you can embed TruStage loan protection to support your members and your portfolio.

Danielle Sesko is the director of product management at TruStage. TruStage is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates. Corporate headquarters are located in Madison, WI.

The post Balancing Growth And Risk In Uncertain Lending Environments appeared first on CreditUnions.com.

Top-Level Takeaways

• Outcomes, not good intentions, better determine where work belongs in an institution.
• Narrowing focus areas can help a foundation gain clarity without sacrificing purpose.
• Financial education has a greater impact when people have access to tools and real-world application.

Financial education initiatives aren’t neutral. The credit union industry rarely talks about it this way, but balance sheets and data do.

At Wright-Patt Credit Union ($9.6B, Beavercreek, OH), leaders identified a clear pattern across its financial learning programs. Members who participated in that learning engaged more with the credit union. Deposits grew, loan balances shifted, and relationships deepened.

“Intentionally or unintentionally, financial learning became a pipeline into the credit union,” says Ivy Glover, director of community impact and development and executive director of the WPCU Sunshine Community Fund.

This created an opportunity for additional clarity and cohesion. Foundations are designed to give without expectation of a return. Credit unions, on the other hand, want to responsibly grow. So, what happens when a product or service does both? To answer that, Wright-Patt examined what it offers as developmental and what it offers as philanthropy.

“There’s overlap that should exist,” Glover says. “But there’s also overlap where we can provide more clarity.”

3 Questions To Rethink

Internally, the WPCU Sunshine Community Fund Board, senior leadership team and community development staff began examining the credit union foundation through a new lens.

“We started talking about this in terms of swim lanes rather than driving lanes, meaning there’s some fluidity,” Glover says. “Where does it make sense for the foundation to operate in a way that flows into the credit union and vice versa?”

To build cohesion and clarity as well as make a greater community impact, the credit union considered three essential questions:

1. 1. What do we want the foundation to represent or achieve over the next 5 years?
   2. Why would the foundation need to be a passthrough for nonprofit partners and neighbors?
   3. How can the foundation support execution of the mission and purpose for the credit union?

Ultimately, the group settled on a shared outlook.

“Programming should live under the credit union, and giving should live under the foundation,” Glover says.

Today, the credit union is figuring out how to make that outlook a reality.
Don’t stop here. While Wright-Patt Credit Union works to clarify the line between philanthropy and development, Marine Credit Union is intentionally blending the two. Read more in “How Marine Credit Union Shifted Its Foundation From Siloed To Symbiotic.”

From Strategy To Operational Changes

New strategies tend to take time to come to fruition. After WPCU clarified its outlook for the credit union and the foundation, however, it made some immediate changes. It narrowed the Sunshine Community Fund’s eight wellbeing focus areas to four and stopped pursuing major external funding to avoid competing against the very community partners it seeks to support.

“Our primary revenue resources come from are our employees, our members, and the credit union itself,” Glover says.

Today, a new model is emerging where the foundation functions as a funder, whereas the credit union increasingly handles delivery and engagement.

In three years, Glover envisions the credit union’s community development specialists and coordinators engaging with community partners, SEG organizations, and business partners while the foundation focuses on providing grants, investments, and funding for nonprofit partners. It could also support scholarships, housing initiatives, and, potentially, cover the costs to develop and distribute tools like the Pocket Money Mentor, a self‑paced workbook that helps build practical money habits around spending, saving, borrowing, and planning.

The Effect On Financial Education

The new approach means neither Wright-Patt Credit Union nor the WPCU Sunshine Community Fund has to eliminate programs. However, programs might evolve or move.

This is especially true when it comes to financial education.

In the past, the foundation handled WPCU’s Money Magnifier curriculum, a K-12 financial literacy program that aligns with state standards. After the credit union hired a community development coordinator to work directly with schools to manage student educational engagement, it blended the model. Today the foundation funds the development and provision of the curriculum and resources in community, and the credit union partner-employees use the resource to teach students directly.  The new structure takes into account the increased likelihood students will want to access WPCU products, such as checking accounts or auto loans, and provides an environment in which the coordinator can talk about it.

“We want to have the flexibility to pair the educational tools with real-world application and resources,” Glover says.

A Little Gray Is A-OK

Balancing purpose and impact for the credit union versus its foundation can be difficult, but this duo views the work as just another way to serve their community more effectively and efficiently while giving each organization a clearer role.

WPCU’s shift remains a work in progress, and given the diversity of missions and intended outcomes among credit unions and their foundations, Glover says there’s no one single structure that translates cleanly across institutions.

“No matter what structure you choose, there’s always going to be some gray area,” Glover says.

Glover doesn’t see that as a problem, however, because the core of the movement doesn’t change.

“At the end of the day, both entities exist to fulfill WPCU’s purpose and mission,” she continues. “The approach to making impact might look different, but helping people and the community live financially well and being there for them at every step is what we’re all here to do.”

Connect, collaborate, and leave inspired. Looking to pose questions, share best practices, and talk openly about foundation strategy and impact, funding and grantmaking, collaboration and partnerships, governance and leadership, and more? Connect with peers from across the industry at the Callahan Foundation Roundtable on June 2-3. Registration is open; contact Callahan to learn more.

The post The Line Between Growth And Impact Was Blurry. Wright-Patt Decided To Redraw It. appeared first on CreditUnions.com.

The Challenge

4Front Credit Union’s ($1.0B, Traverse City, MI) contact center lacked the data and tools to guide staffing and scheduling decisions. Its reliance on manual reporting and an aging on-premises phone system led to inefficient shift coverage, high overflow call costs from a third-party partner, and inconsistent member experiences. At the same time, its agents faced burnout risks due to unclear break structures and unnecessary Saturday staffing, all without reliable data to justify scheduling choices.

The goal: Maximize efficiency, minimize costs, and provide members with the best service possible.

The Solution

4Front partnered with TTEC Digital to replace its on-premises contact center with Genesys Cloud and implement Workforce Management (WFM) software — a solution that predicts call volumes to ensure the right number of agents are scheduled at the right times.

The transition included structured training, extensive testing, and data-driven scheduling guidance. TTEC Digital also integrated SmartApps to streamline member authentication and prevent fraud within the new platform. Finally, the team built custom forecasting models and trained leaders to use data for scheduling and ongoing optimization.

The Results

By migrating its on-premises contact center to Genesys Cloud and implementing WFM capabilities, 4Front transformed its operational efficiency. Most notably, it achieved a 58% reduction in overflow calls sent to its third-party partner, keeping more interactions in-house.

This approach allowed 4Front to lower operating expenses, speed up service delivery, and reduce handle times, all while providing a more consistent and professional member experience.

Learn More About TTEC Digital’s:

The post Smarter Scheduling Delivers Faster Service And Lower Costs For 4Front Credit Union appeared first on CreditUnions.com.

Auto lending remains a cornerstone of credit union growth, but the foundation is shifting. Rising vehicle costs, record loan balances, and the rapid expansion of longer-term financing are creating a structural increase in negative equity that is reshaping both borrower behavior and portfolio risk.

Recent data confirms the scale of the shift. The average amount financed for a new vehicle reached a record $43,899 in Q1 2026 — nearly $44,000 committed to an asset that begins losing value the moment it leaves the lot¹. Monthly payments have climbed alongside that figure, and nearly one in five borrowers is now committing over $1,000 every single month just to keep a vehicle in the driveway.

When that payment is attached to a seven-year loan on a depreciating asset, it is not simply a financing decision. It is a financial trap that is becoming harder and harder to exit. These are not isolated data points. They reflect a broader change in how vehicles are being financed and what it takes for borrowers to remain in the market.

To manage rising costs, borrowers are increasingly turning to longer loan terms. Loans of 84 months or more now represent a growing share of originations, rising sharply in recent years. In some segments, particularly trucks and higher-trim SUVs, extended terms are becoming the default because they are often the only way to achieve a target monthly payment. For credit unions, this raises an important strategic question: are longer terms solving the affordability problem, or simply pushing risk further into the future?

Negative Equity Is Becoming More Common

Negative equity has long been a part of auto lending. What is changing is how persistent and widespread it has become — and how deeply its roots trace back to the pandemic.

During the pandemic, a semiconductor shortage created a severe shortage of new vehicles on dealer lots. Prices soared, and buyers, either flush with disposable income or lacking other transit options, paid up. That wave of inflated purchases is now coming back around. As those borrowers attempt to trade in, they are discovering that their vehicles are worth far less than they owe.

According to a recent Wall Street Journal analysis, about 30% of borrowers who traded in a vehicle in Q1 2026 carried negative equity, with an average shortfall of $7,200 — a 42% jump compared with the same period five years earlier⁷. Borrowers with negative equity financed an average of nearly $56,000 for a new vehicle in Q1 2026, roughly $12,000 more than the typical buyer, resulting in average monthly payments of $932 — the highest ever recorded.

The downstream consequences are significant. Consumers who rolled over negative equity from a prior vehicle loan were more than twice as likely to have their car repossessed within two years, compared with those who netted money on a trade-in, according to a 2024 study from the Consumer Financial Protection Bureau⁷. Default rates on car loans rose in March 2026 to their highest levels since 2010.

At the same time, affordability pressures are not easing. Used vehicle prices have recently increased by approximately $1,500 in a short period, adding further strain to both new and pre-owned buyers. As more consumers shift toward used vehicles to manage costs, they are encountering many of the same challenges.

The Trade-Off Behind Longer Terms

Extending loan terms has become the primary tool for maintaining affordability. It works in the short term by lowering monthly payments. However, it introduces longer-term risks for both borrowers and lenders.

Borrowers remain in negative equity positions for a longer portion of the loan. The likelihood of rolling that negative equity into the next transaction increases. Credit unions, in turn, carry exposure on depreciating collateral for extended periods.

In effect, longer terms address payment, but not financial sustainability. This creates a difficult balancing act. Without competitive payments, credit unions risk losing volume to dealerships and captive lenders. But relying solely on longer terms can increase portfolio risk and limit future lending opportunities.

A Structural Alternative To Extended Terms

Addressing affordability without compounding risk requires a different approach. Residual-based financing offers an alternative structure that changes how vehicle loans are built.

Instead of making payments on the full loan amount, monthly payments in a residual-based structure are calculated on the difference between the purchase price and a guaranteed future value set at origination. The result: lower payments without adding months to the term. At maturity, borrowers can keep the vehicle, refinance, trade, or walk away — a clean exit that breaks the negative equity cycle rather than extending it.

This shift creates several advantages. Borrowers can achieve lower monthly payments without extending terms beyond typical ranges, often 24 to 72 months. At the end of the term, they have clear options: keep the vehicle, refinance, trade, or return it and walk away from the remaining balance. Most importantly, this structure helps reduce exposure to negative equity by aligning the loan with expected vehicle value over time.

Supporting Both Member Outcomes And Portfolio Performance

For credit unions, improving affordability is not just about originating loans. It is about ensuring those loans perform over time. When borrowers are placed into payments they can realistically afford, the benefits extend beyond the individual transaction. Lower payment stress can contribute to stronger repayment behavior, improved member satisfaction, and more stable portfolio performance.

Residual based financing also provides a way to compete more effectively in a payment-driven market. Dealerships and captives continue to focus heavily on monthly payment as the primary decision factor. Without comparable options, credit unions risk losing relevance in both direct and indirect channels. By offering an alternative to extended-term financing, credit unions can maintain competitive positioning while managing risk more effectively.

Residual-based financing also delivers a meaningful yield advantage for credit unions because the loan amortizes to the guaranteed future value rather than to zero. This produces a higher effective yield compared to a conventional loan of the same term, an outcome that supports portfolio performance alongside the member benefits.

Expanding The Lending Toolkit

One of the more telling dynamics in today’s market is that many borrowers are not choosing longer loan terms because they want to. They are choosing them because they feel they have no other option. That perception presents an opportunity. Residual-based financing introduces another lever for managing affordability — one that does not rely on extending loan duration or increasing borrower risk. It allows credit unions to structure loans more strategically, balancing payment, equity position, and portfolio performance.

Looking Ahead

J.D. Power analysts have explicitly warned of a “day of reckoning” as negative equity balances and long-term loan exposure accumulate across lender portfolios. That language is striking because it signals not a gradual shift but a potential inflection point. The credit unions best positioned for what comes next will be those that moved before the pressure became acute, not those still extending terms and hoping the market stabilizes.

Negative equity is becoming more embedded in the auto finance system, driven by rising vehicle costs, higher payments, and the growing reliance on extended loan terms. Addressing this challenge requires a shift in approach.

By incorporating alternative structures such as residual-based financing, institutions can help members avoid or exit the negative equity cycle while maintaining competitive positioning and supporting long-term portfolio health.

The goal is not simply to make the next payment work. It is to ensure that each loan puts the member in a stronger position for the next financial decision.

If your credit union is still relying solely on term extension to compete on affordability, you are solving today’s payment problem while building tomorrow’s portfolio risk. Join us on May 19 to explore a different path.

Register for our live webinar, Beyond Conventional Auto Lending: The Advantages of AFG Residual-Based Financing, on May 19 at 1 p.m. CT / 2 p.m. ET, where we’ll explore how residual-based financing works and how it can help your credit union address affordability challenges, reduce negative equity exposure, and strengthen portfolio performance.

Auto Financial Group (AFG), a Houston-based company, provides an online, residual-based, walk-away vehicle financing product called AFG Balloon Lending, as well as vehicle leasing and vehicle remarketing to financial institutions across the United States. For more information about AFG, call toll free at 877-354-4234 or visit www.autofinancialgroup.com.

Tim Kelly is president and chief operating officer of Auto Financial Group. He has more than 25 years’ experience delivering solutions to financial institutions. Contact him at tkelly@autofinancialgroup.com.

The post The 84-Month Trap: How Negative Equity Is Quietly Undermining Your Auto Portfolio appeared first on CreditUnions.com.

Those developments come as the industry’s average member age remains in the mid-40s, and credit unions of all sizes search for ways to attract young members and hold them over the long haul.

From First Account To Adulthood

In 2025, SchoolsFirst Federal Credit Union ($36.7B, Tustin, CA) had more than 139,000 members who were age 17 or younger. That’s a triple-digit increase of 142% since 2010. Even better, the credit union has tracked that cohort’s engagement upon reaching adulthood and has noted a steady uptick in participation and engagement that rivals its average adult member.

SCHOOLSFIRST FCU MEMBERS WITH 4 TO 7 PRODUCTS
FOR SCHOOLSFIRST FCU | DATA AS OF 2025
SOURCE: SCHOOLSFIRST FCU

Young members of SchoolsFirst FCU have two youth account options, depending on their age. Those up to 12 years old may join the credit union’s Junior Varsity Club, whereas 13- to 17-year-olds may join the Varsity Club.

Parents generally open youth accounts when children are approximately 6 years old, although enrollment is balanced across all age groups. Regardless of age, the credit union offers age-appropriate products and services for each cohort, such as the College Saver Share Certificates and a Youth Debit Mastercard with spending and withdrawal limits. A whopping 69% of Varsity memberships carry the youth debit card, with 53% of those members actively using it.

A full 87% of youth memberships are opened in the branch, but the credit union notes a growing number of youth membership application coming in across digital channels, including online and mobile. To bolster that growth and highlight its youth offerings, the cooperative is producing web content, print materials, educational workshops, and more.

Once the credit union signs up a young member, it offers financial workshops as well as online and mobile services to serve them as they grow into adulthood. It also leans on modern communication platforms, including social media video, to connect with young members on channels they prefer.

SchoolsFirst FCU builds its youth-to-adult engagement model around four key areas:

• Early Financial Education And Workshops — This includes money management, in-school events, digital and print resources, and more.
• Youth Products — From youth debit cards to savings accounts and beyond, SchoolsFirst FCU supports all its youth products with education, resources, and guardrails like ATM usage limits to encourage responsible use.
• Parental Engagement — Those overseeing the accounts have guidance on different product tools and features, best practices to support youth financial development, and more.
• Automatic Transition To Adult Membership — This step at age 18 ensures continuity and minimizes friction to preserve member relationships. It also provides immediate access to checking and debit products, savings tools, credit-building opportunities, and more, with no new onboarding required.

No Substitute For School

Jeanne D’Arc Credit Union ($2.2B, Lowell, MA) has operated in-school branches since 1997 and currently runs three, the newest of which has been in place for a decade. The credit union tracks member engagement for those who start their accounts as students and reports 80% are still active 15 years later.

What does that engagement look like? The cohort holds more than a single savings account, and credit union leaders are digging into whether those members have taken out loans and how their participation has changed over time.

“We build their trust and get them at the start of their banking relationship,” says Robin Lorenzen, chief marketing officer. “They trust us because we were there when they were growing up.”

Jeanne D’Arc recruits high school branch managers to engage with the students, teaching the basics of banking and writing scholarship recommendation letters. It also offers student interns class credit for working the in-school branch. Those interns also help spread the word about the credit union.

Even with modern digital banking and financial education tools, Lorenzen says there’s no replacement for the in-school branch experience and classroom-based financial education.

“They’re engaged on multiple levels because we’ve come to them instead of trying to get them to come to us,” she says. “We’re meeting them where they are, and those high school branches create a unique relationship with the students.”

“This generation wants to do it themselves, but they want somebody there when they need help,” she says.

But branches alone aren’t enough, Lorenzen adds. The credit union also has a six-person financial education team that supplements the in-school branches and teaches in the classroom. Those multiple touch points reinforce themselves over time, building a relationship with the students that leads to trust and long-term engagement.

The credit union provides in-person support and builds relationships through high school branches. As those members age out, they know they can still turn to a branch when they need help, but they also know how to navigate online banking and self-service resources.

The growth of self-service channels in the past 15 years has been instrumental in forging long-term engagement, Lorenzen says, because graduating students know they don’t need to find another bank or credit union after high school.

“They know they can still bank with us,” the CMO says. “That trust is there, so they take us with them.”

Lessons Learned

To replicate the success of SchoolsFirst FCU and Jeann D’Arc, both credit unions say it’s important to understand this a long-term commitment to member development, not short-term product growth.

SchoolsFirst FCU also says its crucial to empower front-line staff to act as advocates for members. Thoughtful questions paired with the right solutions, not a focus on pushing products, builds trust early and establishes the foundation for a durable relationship.

For Jeanne D’Arc, maintaining touchpoints with students is key. This includes the in-school branch as well as the classroom, student activities, Reality Fairs, and more.

Equally important? Try to keep it light.

“In high school it’s not all about selling and teaching,” Lorenzen says. “There are ways to bring in the kids to interact, whether it’s trivia or giveaways or something like that. It’s not always about banking; it’s about connection.”

The post 2 Tactics To Increase Young Member Engagement appeared first on CreditUnions.com.

Despite strong growth across the SMB segment, operational pressures remain high. Business owners manage fluctuating receivables, payroll timing, vendor payments, and rising costs — often simultaneously. Payment acceptance and expense tools are central to navigating those challenges. Merchant processing and business credit cards help smooth cash flow, extend payment windows, and give owners flexibility when inflows and outflows are misaligned.

Yet nearly 40% of SMBs still don’t use a business credit card, even though nearly half say they would pay for one offering digital tools and control over payment timing. That gap represents both unmet needs and untapped opportunity for credit unions.

Merchant services also play a larger strategic role. Payment processing is one of the most consistent touchpoints between an institution and its business members, generating recurring fee income while providing visibility into sales trends, revenue timing, and seasonal patterns. When those transactions move to third-party processors, credit unions lose not only revenue, but insight that could support more informed lending, treasury, and advisory conversations.

Community financial institutions already hold an advantage with SMBs. Seventy-six percent of small business borrowers report satisfaction with credit unions over large banks or online lenders thanks to relationship-based service and local expertise. However, that advantage can erode when merchant capabilities fail to match modern expectations. Ease of use, reliability, and integration with accounting and point-of-sale systems are now baseline requirements, not differentiators.

Technology expectations are accelerating. The vast majority of SMBs accepting in-person payments plan to upgrade their payment technology in the next year, and digital wallets and software-based platforms have become standard. Business owners want payment systems that reduce manual work, integrate with their existing tools, and support multiple payment methods without added complexity.

For credit unions, offering merchant services and business credit cards is no longer just about expanding product menus. It is about staying embedded in how members run their businesses. When payments, credit, and core banking work together, credit unions can protect long-term relationships, generate sustainable revenue, and remain the trusted financial partner SMBs rely on as they grow.

The post The Merchant Services Advantage For Credit Unions appeared first on CreditUnions.com.

We view member experience as a system that must be designed, measured, and continuously improved. That requires clear ownership at the executive level. My role is crucial not to control all touch points but to align the organization around an MX strategy.

Andre Vygnanski joined OUR Credit Union ($360.4M, Royal Oak, MI) as the chief experience office in February 2024. Prior to that he was CEO at Ukrainian Selfreliance Michigan Federal Credit Union ($138.0M, Warren, MI) for more than five years and had been a relationship manager for a major bank for nearly nine years.

What has changed in member experience, what hasn’t, and how has its leadership matured at credit unions?

Andre Vygnanski: Several years ago, member experience was about service, how friendly we were, how quickly we responded, and how consistent we were across branches. The core of member experience is still about trust and human member connection, which remains our differentiator, but member experience is no longer a front-line initiative. It’s now part of the entire credit union mission.

Member experience is now shaped just as much by digital platforms, data, and automation as it is by people in branches and contact centers. Members expect one seamless relationship with us. My role has matured from overseeing service delivery to creating the entire member lifecycle. This includes onboarding, digital engagement, product adoption, and long-term relationship management.

The other part is involved in technology decisions, data strategy, and revenue generation. Experience is no longer soft function, it is directly tied to growth, retention, and member lifetime value. Our credit union treats member experience not as a department but as a system that drives the whole organization.

Two more important aspects. First, employee experience is just as important to me as MX because I must empower our employees to serve our members. Second, member expectations are shifting from experience to guidance. Members expect us to use the data they allow us to access to guide them, not just serve them.

How does your organization approach member experience, and where does dedicated MX leadership have the most impact today?

Andre Vygnanski: We view member experience as a system that must be designed, measured, and continuously improved. That requires clear ownership at the executive level. My role is crucial not to control all touch points but to align the organization around an MX strategy.

Digital branch environment becomes more critical because there are fewer touchpoints to recover from poor experiences. Our staff has an increasing amount of data specifically from digital channels about preferences, behaviors, and trends, and we need leadership to turn that into action steps so we can continue to meet growing demands of members through guidance and service.

This interview has been edited and condensed.

The post 6 Takes On Today’s Member Experience: Andre Vygnansk appeared first on CreditUnions.com.