“Where will we play?” is not only about credit unions expanding their total addressable market through geographical expansion or mergers. It's also about their choices of channels used for distribution and the products they offer. One of our survey questions asked study participants to name their Top Three distribution channels in the pre-pandemic period and what they expect those Top Three to be in 2022 (figure 4). As the colored stars highlight, there were some statistically significant differences between the Top Three distribution channels in the pre-pandemic period and the expected Top Three in 2022. For example, the percentage of credit union executives considering mobile apps or online via a tablet or smartphone to be a Top Three distribution channel increased significantly. By contrast, significantly fewer study participants expect branches and call centers to be a Top Three distribution channel in 2022 compared to the pre-pandemic period. Interestingly, the percentage of survey participants considering partnerships with fintech lending platforms to be a Top Three distribution channel also grew Top three distribution channels pre-pandemic vs. 2022 expectations Figure 4
revenue drivers in 2022 compared to the pre-pandemic era.
Top three revenue sources pre-pandemic vs. 2022 expectations Figure 5
Figure 7
Adoption of key technologies and digital capabilities
The second exception was an increase in the percentage of study participants expecting sales of whole loans or participations to be one of their Top Three drivers of revenue — up from a low base of 4% during the pre-pandemic era to 11% in 2022. Credit Unions’ “HowWill We Win?” Choices To understand credit unions’ “How will we win?” choices, we explored their current, self-reported Top Three sources of competitive advantage. The twelves sources of competitive advantage receiving the highest percentage of 1, 2 or 3 rankings can be found in figure 6. Credit union executives citing member service as one of their leading sources of competitive advantage is troubling because according to the American Customer Satisfaction Index (ACSI) , credit unions were on par with, or trailed, banks in
Percent of responders giving a 1, 2, or 3 rank
Had pre-pandemic (February 2020) Acquired during pandemic (March 2020-April 2021) Don’t have but will acquire by end of 2022 Don’t plan to add by end of 2022
57%
Used vehicle loans
50%
0
20
40
60
80
100
38%
Mortgage loans: home purchase
APIs for vendor relationships and partnering
45%
Digital new account onboarding
31%
Debit card interchange income
32%
End-to-end digital new account opening
31% 31%
Mortgage loans: Refinance
Cloud computing
28%
NSF/Courtesy Pay fees
Advanced data and analytics
19%
Digital auto loans - minimal or no human interaction required
26%
New vehicle loans
20%
Digital mortgage loans - minimal or no human interaction required
20%
Member business loans
26%
Virtual or video agent chat capability
16%
Time period
Investment income Home equity and HELOCs
Personalized communications or offers using artificial intelligence
Pre-pandemic Expected in 2022 Increase Decrease 90% confidence in:
12%
13%
0
20
40
60
80
100
16%
SOURCE: CUNA Mutual Group © November 2021 THE FINANCIAL BRAND
Figure 6
4% 11%
Sales of whole loans or participations
Top three sources of competitive advantage
SOURCE: CUNA Mutual Group © November 2021 THE FINANCIAL BRAND
Percent of responders giving a 1, 2, or 3 rank
terms of members’ satisfaction with the “courtesy and helpfulness of staff” and “call center satisfaction” in 2020. While ACSI is reporting improvements in these areas in 2021, it’s clear credit unions no longer dominate on satisfaction with service like they once may have.
41%
Member service
Percent of responders giving a 1, 2, or 3 rank
Ability to serve members in the channel of their choice Strong community presence
35%
88%
significantly. These partnerships represent a new distribution channel to help credit unions generate additional loan volume. Next, we explored credit unions’ Top Three sources of revenue prior to the pandemic and what they expect will comprise their Top Three in 2022 (figure 5). Unlike what we observed with the Top Three distribution channels, there was a great deal of stability in credit union executives’ responses between the two timeframes. There were two notable exceptions: First, there was a significant decline in the percentage of credit unions expecting NSF courtesy pay fees to be among their Top Three
Branches
51%
31%
63%
31%
Organizational culture
Call center
50%
Credit Unions’ “What Capabilities Must be in Place?” Choices
21%
Most attractive interest rates
42%
Via dealership or indirect lending
35%
16%
Easy to do business with
42%
14%
Low fees
Mobile app
69%
To understand credit unions’ strategic choices related to their capabilities, our survey explored credit unions’ adoption of key technologies and digital capabilities. Figure 7 shows those digital capabilities with the highest adoption rates. By combining the dark and bright red segments, we see a majority of credit unions surveyed adopted APIs for vendor relationships
13%
Quality of talent Relationships with auto dealers, RE agents, etc. Operational efficiency
43%
Online via a computer
Time period
38%
13%
Pre-pandemic Expected in 2022 Increase Decrease 90% confidence in:
18%
Online via tablet or smartphone
12%
39%
Financial guidance to help members Size of credit union economies of scale
10%
3%
Via fintech lending platform
16%
10%
SOURCE: CUNA Mutual Group © November 2021 THE FINANCIAL BRAND
SOURCE: CUNA Mutual Group © November 2021 THE FINANCIAL BRAND
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THE FINANCIAL BRAND INSIGHTS WINTER 2021
THE FINANCIAL BRAND INSIGHTS WINTER 2021
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