Jun 24 2019

Credit Union Growing Pains: Trends and Strategies for Sustainable Growth


What Filene's research says about growing your credit union.

Taylor C. Nelms
Taylor C. Nelms
Senior Director, Research
Filene Research Institute
Report Number 481

Executive Summary

As an industry, credit unions have been growing members and assets for decades. At the same time, the total number of credit unions has declined dramatically due to consolidation in the face of growing costs and competition.

Growth is on the agenda of every individual credit union, but it is a delicate balancing act. Grow too fast, and your credit union’s net worth may be adversely affected. Grow too slow, and your credit union may struggle to keep up with changing consumer demands and emerging technology. Making things more perilous is the fact that credit unions must rely primarily on retained earnings to build capital and grow assets.

Why these research reports?

This collection of research from Filene Research Institute will walk you through the key issues for understanding the past, present, and future of growth. We focus on:

  • Historical industry-wide trends
  • Types of organic and inorganic growth
  • Strategies and trade-offs for sparking and maintaining sustainable growth

What are the credit union implications?

Credit unions looking to grow should consider the following:

  • Launch long-term growth with a unique value proposition. For credit unions, identifying a successful value proposition typically means choosing whether to target (1)operational efficiency (i.e., best total cost solution); (2)innovation (i.e., best product solution); or (3)service (i.e., best member solution) in delivering value to members.
  • Be proactive and link strategy to metrics. Growth in consumer financial services is not a simple matter of sales. It is a complex balance between assets, revenue, expenses, losses, and capital. Metrics are important to tracking and incentivizing the right balance. 
  • Stay within the speed limit to power sustainable growth. To grow sustainably, credit unions must grow assets faster than the economy—that is, fast enough to maintain and expand market share.
  • Expand your footprint with smart mergers and acquisitions. Mergers and acquisitions can harness economies of scale and scope to jumpstart growth. 
  • Grow your membership by targeting market niches. Start with research to identify underserved members and learn from them about their needs and expectations. 
  • Serve the underserved. Serving the underserved requires focus, humility, partnership, and investment. But it can also entail developing new offerings.

Filene Research Institute has published nearly 500 research reports over three decades. The archive is both deep and wide. Single studies give us important data points about a given phenomenon. Putting multiple studies into conversation, however, allows us to connect the dots, corroborate our findings, and track trends over time. So, as we revisit Filene’s archive, we are assembling curated collections of research reports on selected topics, providing you with a more comprehensive and strategic overview and giving you the resources that you need to make evidence-based business decisions. If one study offers a window onto what’s happening in the world, these collections will give you a foundation on which to build the whole house.