By B. Dan Berger, NAFCU President, and CEO
The number of compliance concerns a credit union must worry about in its day-to-day operations seems to grow continuously. One such concern that has grown in prominence in recent years is elder financial abuse. This topic, which has gained the attention of regulators and politicians, increasingly focuses on the financial institution’s response. Financial institutions can and should be a critical component of the detection and reporting of elder financial abuse.
With banks and fintechs such as Goldman Sachs and Apple partnering to provide credit cards, Zillow entering the mortgage market and bank lobbyists continuing to levy baseless attacks against credit unions, I am continually asked, “Dan, are credit unions well-positioned for future growth?”
My answer is always a resounding, “You bet they are.
While there may be growing competition for credit unions, there is one key advantage credit unions have over banks and fintechs: consumers’ trust.
American consumers are increasingly turning to institutions with altruistic missions and to those that actively put the interests of their customers over corporate greed and profit maximization. This trust is a result of our industry’s mission of strengthening communities and providing safe, affordable financial services; it is ingrained in our industry’s creed as not-for-profit, member-owned cooperatives.
Over the years, credit unions have seen historic growth — to the tune of a 4.3 percent increase in annual membership from June 2017 through June 2018, according to NAFCU’s 2018 Annual Report. That is in no small part due to the relationships credit unions build with their members.
NAFCU research found that credit unions’ loan growth and lending performance has outperformed that of banks; industry assets grew 5.4 percent in 2018, and 116 million Americans have elected to join the credit union movement to date.
These are telling signs of an industry that is growing stronger, not folding under the weight of competitive pressures. The reality is the credit union movement rose out of consumers’ dissatisfaction with existing financial institutions and out of their desire for safe and affordable financial products and services.
The bank-led 2008 financial crisis affected millions of Americans who had their personal savings wiped out, homes foreclosed upon and pink slips handed to them. Many looked to their banks for help but ended up being charged excessive fees. This caused people to switch from large banks to credit unions in droves.
More recently, the partial government shutdown earned our industry accolades for providing significantly more generous relief than the banking industry did.
It is no wonder why credit unions continue to build trust among American consumers.
Th is is the credit union difference: deeper, more personal member relationships, better rates, and lower fees, and always putting members first. Without question, credit unions’ not-for-profit status and consumer-centric business model will continue to attract American consumers.
Credit unions from across the country will have an opportunity, Sept. 8–11, to join us in Washington, D.C., for our annual Congressional Caucus. Members of Congress will attend to show solidarity and support for our industry’s efforts to provide affordable financial services to their constituents. We will also walk the halls of Congress to better inform congressional leaders of how a strong, growing industry is good for our economy, local communities and all Americans.
Make no mistake, there are competitive headwinds for credit unions in terms of competition from banks and fintechs. But as long as our industry maintains consumers’ trust, we will continue to grow stronger. Consumers’ trust is our competitive edge.
This article was published in the July-August 2019 edition of The NAFCU Journal magazine.
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