NAFCU Services Blog

Dec 19, 2022

How Credit Unions Can Grow Membership Amidst Liquidity Challenges

By Jeff Keltner, Senior Vice President of Business Development | Upstart

Handshake It’s no secret that more and more credit unions are facing liquidity challenges – many are loaned out with more low yield, longer-term assets on the balance sheet than they might want during a period in which interest rates have risen rapidly. At the same time, consumers are spending more on products and services during a time of high inflation, and, as a result, are increasingly tapping into their personal savings. All this has left many institutions in greater need of deposits. With limited liquidity and growing concern about rising delinquencies, many lenders have opted to pull back on consumer lending. Yet, many consumers are in need of affordable credit, particularly when it comes to personal loans to pay down rising credit card debt and meet their everyday needs.

According to Experian, the number of personal loan accounts has increased by 16 percent over the past year, mostly driven by borrowers looking to consolidate their debt to combat inflation.1 As loans and investments come to maturity and liquidity increases, personal lending can offer returns as high as 9 percent while representing a unique opportunity for credit unions to gain new members and build new relationships. 

Additionally, as member-owned institutions, credit unions strive to continue lending in order to support their communities. According to Callahan and Associates, credit unions have continued to lend and even increased lending during the Great Recession – “In times of economic shrinkage and recession fears, the credit union mission becomes integral to the financial wellbeing of existing and potential members. The objective to reach those who are most vulnerable to economic shocks has helped keep member-owners — as well as credit unions themselves — more resilient in the long term.”2 As banks continue to pull back on consumer lending, credit unions have a unique opportunity to compete and gain market share while adding new members in their time of need.

In order to continue gaining new, creditworthy members for both short-term and long-term growth, the right fintech partnership can enable credit unions to continue serving borrowers’ needs with personal loans while maintaining strong credit performance, even in periods of economic downturn.

A Better Alternative to a Loan Purchase

Unlike loan purchase programs – where a fintech balance sheets and packages the loans for bulk sale to the credit union – some fintechs offer an entirely different type of solution that allows credit unions to gain long-term members for sustained growth, rather than simply capturing the short-term yield alone.

This special class of lendtechs use their various marketing channels to source qualified loan applicants that meet the credit unions’ specific requirements and target geographies. After that, the consumer would receive personalized loan offers from the credit union. From there, these new consumers would transition into the credit union’s own branded experience, becoming new members in the process.

In these types of partnerships, the credit union not only gains an asset, but a creditworthy member with an attractive borrower profile.

Gain Creditworthy Borrowers 

According to the World Council of Credit Unions, the average age for a credit union member is 53, but with the help of a lendtech’s all-digital experience, credit unions can gain members in their prime borrowing years.3

For example, the average age of a credit union member gained through Upstart is 39 years old, and 61 percent of borrowers are between the ages of 29-38. Even further, 66 percent of borrowers have some form of postsecondary education and an average income of $102,000.

A New Member for Long-Term Growth

By employing this partnership model and leveraging a lendtech’s digital experience to attract younger borrowers, credit unions are poised to grow those relationships by driving deposit growth and cross-selling other offerings that best meet those new members’ needs over time. By leading with lending and serving consumers in their time of need, members are likely to be more loyal and receptive to future offers from the credit union. Therefore, they represent a strong cross-sell opportunity, which is traditionally difficult with indirect lending models.

Why Downturn Can Be The Right Time to Innovate

By continuing to lend during recessionary times, credit unions can reap the reward of increased market share and member growth. As credit unions head into 2023, fintech partnerships should be top of mind as they determine how to sustain this growth.

Economic downturn can prove to be a beneficial time to adopt new technologies so credit unions are prepared to lend when times improve. Evaluating the right partner and aligning the necessary internal teams for due diligence can take months, followed by implementation.

If credit unions take this economic cycle as an opportunity to vet and implement new fintech partners, they will be more prepared to accelerate lending once interest rates stabilize, allowing them to be best positioned to serve their members’ needs and drive their future growth.

Read more about how Upstart is partnering with credit unions in challenging times.


1. Experian. "Personal loans growing in 2022 amid rising interest rates." August 27, 2022.

2. CreditUnions.com. "The Last Crisis vs. Today: A Credit Union Perspective." November 7, 2022.

3. World Council of Credit Unions. "2020 Statistical Report." 2021. 

About the Author