How Credit Union Mergers Affect Service to Members

Executive Summary

The study goes beyond traditional financial analysis and member surveys, and uses a sophisticated analytic technique that measures “member service efficiency.” This approach quantifies a credit union’s member service level relative to other credit unions and time periods. 

Member service efficiency is based upon techniques at the cutting edge of performance measurement research. The approach has been used in many other industries, and we have spent a number of years refining and perfecting its use for credit unions. Member service efficiency can be compared across credit unions of all asset sizes without putting smaller credit unions at a disadvantage. This makes it a versatile tool in evaluating mergers between two partners regardless of their relative sizes.

What is this research about?

The researchers of this report evaluate how well merging credit unions serve their members before the merger, and how well the merged entity serves its members. This requires a measure of credit union performance that focuses on services to members. To measure the success of a merger, the researchers calculated a service performance score for each credit union before a merger and for the combined credit union after the merger.

What are the credit union implications?

Members of acquiring credit unions do not benefit significantly from the merger during the same period. However, their benefit levels do not decline, either. The study does not assess strategic benefits beyond the three-year period. However, it is reasonable to assume that long-term benefits are substantial in many cases.