As a movement, we have much to be proud of as we look back on 2009. In spite of a difficult year, we lived up to our mission of uplifting communities. As we look ahead to 2010, we may have another difficult year ahead of us characterized by slower organic loan growth, increases in loan delinquencies and losses, downward pressure on net income and falling net worth ratios.
In spite of these issues, I believe we have three outstanding opportunities before us to:
- Boost fee income
- Contain costs
- Increase relevance
Boosting fee income can include increasing payments as a source of non-interest income; adding membership by reaching out to new demographics; retaining and cross-selling existing member relationships through superior service; capitalizing on interchange; evaluating your networks for operational efficiencies and access and convenience for your members; and investing in analytics and portfolio optimization so that you can influence card members’ behavior, boosting card usage and interchange income.
After a year in which Congress was distracted by the economy and health care, it can truly be said of interchange that the future is now. It is not clear how or if interchange rates will change, but CO-OP Financial Services encourages all institutions to continue supporting organizations such as the Electronic Payments Coalition (EPC) to protect fair interchange income for credit unions.
Cost containment can be found in enhancing fraud loss prevention measures through greater data security, improved controls and card reissuance, all of which will build cardholder confidence and increased usage. Secondly, contain costs by protecting your relationships with your existing members. Focusing on member service, such as 7×24 call center support, will reduce costly member turnover.
Credit unions also have an unprecedented opportunity to increase relevance. Compete head to head with every large financial institution in your field of membership. Find the most appropriate trends for credit union relevance. For instance, many banks are turning their backs on small business customers. This provides a source for members and is a great business opportunity. Finally, provide products and services that are innovative, promote a bigger geographic footprint and access ubiquity and cost efficiency, all with an eye for membership stickiness and retention.
The advantages of credit unions over banks as primary financial institutions has never been more compelling, or more widely reported by personal finance gurus and columnists. Among these have been Suze Orman (here), Liz Pullman Weston of MSN Money (here), Gerri Willis of CNN (here), Vera Gibbons of CBS News (here) and Bob Trebilcock of CBS MoneyWatch.com (here).
These three opportunities constitute a stand out and stay ahead strategy for the credit union industry in 2010 and beyond.