and partnering, end-to-end digital new account opening and digital new account on-boarding prior to or during the pandemic. Credit unions that do not yet possess a digital capability but are planning to acquire it by year- end 2022 are noted by the dark grey segments. Nearly half (45%) of respondents expect to adopt advanced data and analytics by year-end 2022. Adoption of personalized communications of offers using artificial intelligence is expected to grow 38 percentage points. Other technologies such as the digital new account opening and digital auto and mortgage loans, are also expected to experience solid increases in adoption by the end of next year. Our survey also asked credit union executives what they thought their Top Three non-digital capabilities were in the pre-pandemic period and what their expectations were for 2022 (figure 8).
However, top performers in terms of 2020 ROA performance were significantly less likely to have plans to merge by the end of next year. Distribution Channels Top performers also anticipated major shifts in distribution channels prior to the pandemic. They were significantly more likely to mention the following as Top three distribution channels prior to the pandemic: ● Mobile apps (top performers in terms of 2020 loan growth) ● Fintech lending platforms (top performers in terms of 2020 loan and membership growth and 2020 ROA) ● Dealerships/indirect lending (top performers in terms of 2020 ROA) In terms of future expectations, top performers were more likely to say the following would be Top 3 distribution channels in 2022: ● Branches (top performers in terms of 2020 membership growth) ● Call centers (top performers in terms of 2018-20 ROA growth) Revenue Drivers Top performers were more likely to say the following would be Top Three revenue drivers in 2022: ● Unsecured personal loans (top performers in terms of 2018-20 ROA growth) ● Used vehicle loans (top performers in terms of 2020 membership growth) ● Used vehicle loans (top performers in terms of 2018-20 ROA growth) Top performers generally were also less likely to expect home equity loans/HELOCs and investment income to be a Top Three revenue driver in 2022. Sources of Competitive Advantage Top performers tend to rely on sources of competitive advantage that are harder for competitors to copy, such as: ● Organizational culture (top performers in terms of 2018-20 ROA growth)
● Strong community presence (top performers in terms of 2018-20 ROA growth) ● Easy to do business with (top performers in terms of 2020 ROA growth) ● Relationships with auto dealers, real estate agents, etc. (top performers in terms of 2020 ROA, 2020 membership growth or 2020 loan growth) Top performers were less likely to cite the following as Top 3 sources of competitive advantage: ● Member service (top performers in terms of 2018-20 ROA growth) ● Ability to serve members in the channel of their choice (top performers in terms of 2020 membership growth) ● Low fees (top performers in terms of 2018-20 ROA growth or 2020 ROA) Does top performers’ lower likelihood of citing these items as Top 3 sources of competitive advantage suggest they should be considered “table stakes”, rather than differentiators? Conclusion This research has shown that credit unions’ strategic choices are extremely varied and there is no single path that delivers growth. Growth is the result of hard strategic choices that create a winning strategy and then successfully executing on that strategy. Having a performance culture and ensuring leadership and frontline staff are rowing their proverbial boat in the same direction help ensure a CU’s strategic choices are successful. Top performers tend to make decisive choices — to do some things and not others — at every stage of the “Playing to Win” cascade to ensure their strategy delivers unique value to members and creates a sustainable competitive advantage. ▪
This research has shown that credit unions’ strategic choices are extremely varied and there is no single path that delivers growth. Growth is the result of hard strategic choices that create a winning strategy and then successfully executing on that strategy.
Three of these non-digital capabilities experienced significant increases in the
percentage of credit union executives considering them to be a Top Three capability during the pre- pandemic period versus in 2022: Digital marketing, user or member experience design and talent
acquisition and development. HowTop Performers’ Choices Differ
Top three non-digital capabilities pre-pandemic vs. 2022 expectations Figure 8
By examining how top-performing credit unions’ strategic choices differ from other credit unions, much be can learned about strategies that lead to growth. Before examining these differences, let’s review how top performing credit unions were defined. For purposes of this research, top performers had to: ● Have a positive change in their ROA between 2018 and 2020 OR ● Be in the top third of credit unions in terms of 2020 ROA OR ● Be in the top third of credit unions in terms of 2020 membership growth OR ● Be in the top third of credit unions in terms of 2020 loan growth Geographical Expansion/Mergers Top performers tended to be much more active in expanding their addressable market through geographical expansion and/or mergers during the pre-pandemic period. However, merger plans for 2022 seem mixed, i.e., top performers in terms of membership growth and loan growth were significantly more likely to have plans merge.
Percent of responders giving a 1, 2, or 3 rank
39%
Digital marketing
52%
34%
Strategic planning process
35%
30%
Community relations and outreach
22%
Time period
Pre-pandemic Expected in 2022 Increase Decrease 90% confidence in:
28%
In-branch sales skills
17%
28%
Expense management
20%
25%
User (member) experience design
44%
22%
Traditional marketing
2%
19%
Talent acquisition and development
39%
14%
New product development
17%
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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