Data released in the World Council of Credit Unions' (WOCCU) 2011 Statistical Report points to a better than average year for global membership growth, solidifying the trend that more consumers are discovering the benefits of membership.
“As a rule, the numbers are trending upwards, although the 8-million-member jump from 2010 to 2011 was a little higher than it has been in years past, which is good news for the global credit union movement,” says Michael Muckian, WOCCU Director of Marketing & Communications. “It's a sign the member-owner financial cooperative model and the benefits it provides continues to gain ground.”
Muckian points to several factors contributing toward growth. “Credit unions worldwide continue to work hard in serving members. New handheld technologies such as personal digital assistants and cellphones have helped more credit unions reach more members in more remote areas.”
“In Latin America, for example, credit unions equip field representatives with technology that enables them to conduct member transactions in real time, then send them into the mountains and other remote areas via motorcycle to serve members in the villages where they live and the fields where they work. The result is better service to more people, many of whom would not have the time and resources necessary to travel to a credit union branch.”
He notes that the fallout from recent bank fee increases, a sagging economy and an overall charge to find a better way to bank has contributed toward the increase.
“Credit unions also have benefitted from public outrage over the role some large money center banks played in the recent global financial recession,” he continues. “As banks withheld money they normally would loan to customers to shore up their own books, credit unions stepped forward with money to lend to help members face their own financial challenges. The most prominent example of that outrage, of course, is Bank Transfer Day here in the U.S., but credit union systems worldwide have benefitted from growing recognition from consumers and from regulators as to the important role credit unions play in supporting local economies.”
Individual credit unions in the US are leveraging the momentum created by various factors to showcase their offerings.
“Members 1st has recently received a Membership Benefits Certificate from CUNA which indicates our member households save an average of $150 per year by banking with Members 1st as opposed to other financial institutions,” says Josh Markle, Marketing Manager at Members 1st Credit Union ($100 million, Redding CA). “We've paired this $150 annual savings message with our Free Checking account and have seen great results. We've already exceeded our 2012 membership growth goal of 5% as of the end of June.”
Markle says that Members 1st Credit Union experienced a 40% increase in membership growth in the fourth quarter of 2011. “Most of our new member growth can be attributed to Bank Transfer Day and the development of debit card fees by large banks.”
Other credit unions continue to expand within their footprint and explore new markets. “We have three new branches in the works, as well as a fourth we are pursuing,” explains Bob Fisher, President/CEO at Grow Financial Federal Credit Union ($1.8 billion, Tampa, FL). “We have also recently made the decision to begin expanding outside the state of Florida by the end of this year for both business reasons as well as geographic diversity for disaster contingency planning within the loan portfolio.”
Credit unions like Eaton Family Credit Union ($54 million, Euclid, OH) plan to stay the course. “We want to keep our loan portfolio diversified so that we can offer the credit union basics, which include (low) loan fees, higher interest-earned, lower interest-charged in a member-friendly environment where they can work with us however works best for them….in lobby, with ATM, online, by phone, via mobile device, 24/7 member center and shared branching,” says Fred Siegel, Business Development Manager. “And now we’re even taking debit cards for emergency loan payments and debit/credit cards to open accounts.”
As Membership Grows the Credit Union Landscape Changes
Although the number of members increased last year, the number of actual credit unions decreased. WOCCU reported that the number of credit unions worldwide decreased more than 3%, but Muckian explains that different areas of the globe saw a variety of growth circumstances.
“If you follow the U.S. credit union movement, you know the trend for institutions to merge has been ongoing for decades. As financial service delivery becomes more sophisticated, more institutions seek greater economies of scale and broader operational capabilities to better compete. Credit unions merge so they can better serve their members, and as you can see membership has grown not only in the U.S., but worldwide as a result.”
“That said, some countries are still seeing an increase in the number of credit unions as systems expand and individual institutions reach out to more members,” he continues. “Whereas countries like Brazil, Great Britain and the U.S. have declined in the number of total institutions, they have grown in membership. Countries like Kenya, Bangladesh and Panama have not only grown in membership but also in the number of institutions. In some developing countries smaller, more personalized credit unions are successful because of the social service aspect they bring to the small communities they serve. In all cases, stability and increases in membership are generally signs that a country's credit unions are doing well.”
In the US, Siegel says that the current business climate presents its own set of challenges. “Financial institutions are especially stressed with the extra cost of doing business that regulatory requirements demand and the cost of offering a broad selection of financial products and services.”
He says that his credit union is large enough to be full-service and offer customized solutions that save the members money. “And we work hard…everyone wears many hats. Unfortunately smaller credit unions cannot spread the costs associated with regulatory compliance, full service and customized member experience. Fortunately, due to technology advances we can get a small branch on board with our systems rather quickly. Each small branch merger location is still running in the same location with a different name on the door.”
US Credit Unions Examine Technological Strategies Deployed Overseas
In fact Muckian adds that the technology strategy used in Latin America is being deployed by one California credit union to serve farm laborers in the field and food processing plants so they don't have to take time off to visit their credit union. “It's one of the first times that technology developed for a developing country, in this case Mexico, has migrated to a developed country.”
Muckian points to the system in Poland as possibly being a model for US credit unions. “The credit union system in Poland, which is where we are holding our World Credit Union Conference next week, has also generated some interest from U.S. credit union leaders.”
He says that the Polish system markets all credit unions under a single brand - SKOK - and essentially operates from a single back office, providing both smaller and larger institutions with the same levels of professional services, but still enabling them to tailor those services to the needs of individual members, whether they be refinery workers or church parish members.
“While the Polish system, which is 20 years old this year, may not offer a cookie-cutter solution suitable for all other credit unions systems, it has been one of the fastest-growing systems in the world in terms of members and services,” Muckian adds. “And since member growth is a sign of credit union success, it seems that Poland and a lot of other credit unions are doing the right thing the right way.”
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