Credit Unions in an Everything Everywhere All at Once World?

Filene is surveying credit union CEOs and strategy leaders to identify the most relevant and impactful trends for credit unions. Take Filene’s inaugural credit union industry insights survey to tell us where credit unions are headed in 2024!

With our last Thinking Forward post, we explored the Top 11 Things Credit Union Leaders Are Watching Out for in 2024. As we’ve continued to dig into the most important strategic issues for credit unions this year, it’s become clear that credit unions today face more than the typical array of planning questions. Credit unions today face an environment marked by relentless change, information overload, and the need for accelerated decision-making. The more we’ve heard from credit union leaders, the more we’re reminded of the often overwhelming, exhausting, contradictory, all-consuming world we saw in one of our favorite 2022 movies: Everything Everywhere All at Once.

Now credit unions are not about to have to plan for parallel universes … but in many ways, navigating the financial services marketplace right now requires planning for many different possible realities—and that has become deeply exhausting for leaders.

What does this everything, everywhere, all-at-once world look and feel like for credit unions? What are the priorities leaders need to zero in on? What steps should they take to accelerate the implementation of their strategies? And how can they avoid getting sucked into the Everything Bagel black hole of trying to do too much?

Why So Tired?

TN: Credit unions have spent the past several years constantly reevaluating their strategy, pivoting every three months, trying to keep track of overwhelming amounts of information, and living with the general uncertainty of the operating environment, the competitive marketplace, shifts in consumer behavior, and macroeconomic news that changes weekly. All of that is just incredibly challenging—psychologically and emotionally exhausting.

CV: We are now four years in since the start of the pandemic and there’s so much on people’s plates. Succession planning, attracting top talent, managing balance sheets and income statements, driving operational efficiency and growth and liquidity, managing asset quality and security—all while trying to secure and maintain deep relationships with members. If you're a leader in the credit union industry, you wonder, “When can I catch a breath?”.

TN: I think leaders are looking for ways to press pause and look up from that swelter of day-to-day demands. And when we do that, we see two really important things:

1. There has been a significant acceleration of leadership transitions—a generational shift in credit union leadership. As a result, I also think that we have seen a growth in organizational focus on culture and alignment as credit union leaders look to drive that strategic focus in ways that empower people to prioritize and take action.
2. We're starting to see a shift in strategic focus at the highest possible level. For many credit union executives, strategy for 2024 and beyond comes down to balancing the “now” with the “next”—in other words, what do you need to do today to grow and survive and how do you prepare for the future? Because of these dual demands, many credit unions are shifting focus from creating new strategy to implementing existing strategy. There’s a real emphasis now on becoming more efficient, productive, and tactical in using strategy to unlock value.

Unlocking Value

TN: So how do you unlock value in the market that you serve? And what kind of value should that be? How do you define and measure it?

CV: It really depends! There’s the growth and financial metrics that credit union leaders are going to be held to by their board and are indicators of the financial health of the organization: Are you getting more members? Are members using your products and services? Are you getting an ROA that's above, say, 60 basis points? Have we maintained our capital?

But at the same time, I think that a lot of credit unions are looking beyond the balance sheet when they define value. They’re also asking, fundamentally, about the depth and quality of the relationships they have with members. Are we engaging our members? Are we improving our members financial well-being? Are we able to reach the parts of our community that need our services? Are we a good place to work? Are our employees happy to be here? Credit unions have multiple stakeholders, and credit union leaders are increasingly being intentional about their responsibilities to their members and boards, employees, and community, as well as the organization itself.

And that's how they demonstrate value. But then we come back to, what are we actually going to be doing to unlock that value?

TN: Right, because however you define success, whatever goals you set, the organization’s ability to meet those goals depends on appropriate resourcing, planning, and action.

CV: One thing we’re hearing from credit union leaders is how important it is to start with data—especially data about your market.

Speed to Insights

TN: It becomes a question of focus again, and data can help you focus. We have seen more Chief Strategy Officers joining credit unions over the past four years than we've seen in probably the history of the industry, and I think it is about creating dedicated roles to drive focus.

What we have seen from successful credit unions in particular is an emphasis on insights: What do your members need and want? What do communities need? What products and services are we offering, and do they align with member needs? This idea of a “member-centric” strategy becomes real and practical with a focus on data.

So where should credit union leaders be investing? Credit unions are still looking to invest in growth, but instead of investing in the infrastructure, it is increasingly becoming a question of investing in getting insights and value out of data. How do we equip our people to use the data? What are the valuable use cases to actually leverage our data?

CV: That’s exactly right. Anybody can collect data, anyone can store data, but are there things that we can use data for? Credit unions are looking for ways to use data effectively to grow their business or build those member relationships or find those efficiencies. Credit unions are trying to be everywhere and do everything—it’s more important now than ever to use data intelligently.

To learn more about the modern credit union data stack and how to increase organizational data analytics readiness, see the reports from Filene’s Center of Excellence for Data Analytics and the Future of Financial Services.

• Our study of credit union data analytics readiness levers is a good place to start.

TN: We often see the question of partnerships come up as well here. I think most credit unions are reliant on partners in their data and technology stack, and nowadays, as credit unions look at their efficiency goals, they are in a place where they're reevaluating what they want out of partnerships. Going back to unlocking value, it’s no longer just a question of finding a partner who can help you sell a product or digitize a business line. Credit unions are asking, how do we find the right partner who shares our values, who is trustworthy, who can help us learn, and who can elevate our ability to be innovative?

CV: I think that's so critical, especially because we're now in a world that has perhaps passed the fintech boom period. There are still many new interesting companies, and entrepreneurship is growing, but we’re not necessarily seeing nearly as many new fintechs appearing and doing really brand-new things as we did 5-10 years ago. What we’re seeing instead is consolidation, more mergers and acquisitions, and a focus on fintech-credit union partnerships, rather than going directly to consumers. And that makes a lot of credit unions pause and wonder, “Well, who should I partner with?”

TN: And is that trustworthy partner able to help you become faster at translating insights into action.

Speed to Action

TN: We've talked about how credit unions are investing in their capabilities to access and use data and insights faster and more efficiently, but I think there’s also a clear need across the industry about putting those insights into practice faster as well.

CV: And understanding which action to take, because it's not just about acting faster—it’s about acting faster in the right way. You could have the fastest motor in the world, but if you're not setting your compass reading right, you're going to be off course.

TN: Perhaps credit unions are dividing into two groups: those who are ready to bring speed to their actions, and those who are still in the process of bringing speed to their insights. Credit unions who asked themselves five years ago, “Who are we? How do we stop being all things to all people?”—those credit unions are ready to bring speed to their actions. But some credit unions are asking themselves those questions now, and for them, speed to insights is the true priority.

CV: And having that foundation is so key—you need those insights to know who you are. Any credit union can be a high performing credit union. It doesn't matter if you're community-based or SEG-based. It doesn't matter if you're $5 billion in assets or $50 million. Whether you have branches everywhere, or if you're fully digital. Whether you're in the city, the countryside, or suburbia. If you have a plan and stick to it, any credit union can be successful. The key is knowing who you are.

Check out Filene’s study of thriving small credit unions to dig into a puzzle-solving framework useful for all credit unions.

Because otherwise, you can get lost in this industry. You might end up being seen as “just another bank” to consumers. But if you can grow your ability to access insights quickly, know who your members are, create an identity and a brand based on who you serve—then you can implement the right actions so much faster.

TN: Caroline, do you think the credit union difference matters to consumers?

CV: I think it does. I just think the challenge is communicating it, because again, there's a lot of noise out there. In this everything, everywhere, all-at-once world, credit unions can get lost in the noise, so it’s important to find messaging that will stick, help you stand apart from your competition.

TN: I agree. I think that the differentiation piece is critical here. “The credit union difference” may mean different things to different types of credit union members at different times for some, it could mean focus on helping me achieve my financial goals. For others it could be a focus on building community. For others it could mean building wealth. But regardless of where the differentiation opportunity lies, it’s key for credit unions to embrace it.

CV: And don’t forget about trust. As we’ve done more consumer research here at Filene, we’ve learned just how hugely important trust is.

TN: Absolutely—and 2023 was rough from a trust perspective, right? It started with a series of bank runs. And although it didn't end up flowing into credit unions, members noticed. For a lot of people, especially young people, that's the first time in a long time, and maybe ever, they’ve seen that kind of panic. It builds distrust, as people began to question the trustworthiness of the banking system as a whole.

CV: There’s certainly a segment of the population that feels a real lack of trust and faith in the system. But ultimately, credit unions are trusted institutions. For many people, trust is built by working with institutions that know them. Institutions that know who you are invite a reciprocal bond, so in return, consumers want to know who the institution is, what its values are. Trust is built in that relationship.

TN: One of the research reports we have coming out soon will dig further into this question of trust. A small highlight: One of the things emphasized in that report is the sense of reciprocity and mutuality that's required to build trust.

Trust is so hard to build and so easy to break. And there are so many different things that can impact trust—that’s where it gets hard. The brand and credibility of the institution matter, but so too does an institution’s capabilities—the ability to follow-through on your promises. So it’s products and services, of course, but it’s also app design or the look and feel of your storefront. And again, different kinds of credit union members may require different outward signs of trust.

CV: And knowing how to communicate that trust takes us right back to understanding the mission and vision of your credit union. Who are you serving? What's the reason your organization exists?

TN: Who is in your community? How do you serve your community? And how do we continue to serve our community over time? Answer those questions, and I feel like credit unions can align their organizations around a powerful vision that can fuel transformation.

— TN & CV

Reach out to advisory@filene.org today to learn more about serving members in an “Everything Everywhere All at Once” world, or to explore any of our other speaking topics!