MADISON, Wis. (1/3/13)--Credit unions enjoyed a wave of positive publicity, popularity with consumers, record growth and a strengthening of political clout during 2012. That doesn't mean they can sit back in 2013 and ride on the coattails of last year's successes.News Now
checked a variety of resources to find out what they are predicting for this year and picked the predictions that seemed to have the most consensus.
This year likely will bring renewed challenges to credit unions' tax status, more credit unions edging closer to their member business lending caps, and the challenges of complying with more extensive regulations. But they also face operational challenges--and opportunities--regarding operating in a near-zero interest-rate environment during a make-or-break year for the economy; technological issues related to mobile banking and the threats to the security of members' data; and marketing challenges in a diverse world.
Here's what to watch for in 2013:
- Operations adapt to today's economic environment. Credit unions will be challenged to maintain narrow net margins while providing expanding services to members who are demanding game-changing innovations, such as mobile banking, all in a slowly improving but still-volatile economy. Financial institutions will pay more attention to operational risks, adjusting strategic plans as needed, and, and will introduce or modify products to reflect the interest-rate realities, especially in mortgages. Some credit unions are already looking for collaboration opportunities and partnerships to provide economies of scale for service.
- Technological and security issues continue. While natural disasters the past few years have prompted credit unions to pay attention to disaster recovery and business continuity measures so members' money is more secure during an event, they also need to protect members' information and accounts from unauthorized transactions. Cyberthieves are beefing up their efforts to illegally gain consumers' information and steal funds from accounts. In fact, some are calling 2013 "the year of the cyberthreat." While criminals have announced they have targeted big banks, they also look for the weakest link in any authentication process. In the past, they targeted credit unions and smaller financial institutions. Credit unions can expect more sophisticated scams to come out of the woodworks, and they will need to beef up their verification/authentication measures on members' accounts.
- Mobile banking isn't going away. In the next two years, mobile banking use will nearly double to about 64 million, according to research by the Aite Group (American Banker Dec. 19). The number of smartphone users in the U.S. is estimated to increase from 105 million last year to 174 million in 2016. Tablet users are expected to increase to 100 million by next year and 112 million by 2016, up from today's 65 million. Credit unions that didn't get on the mobile banking bandwagon when it soared last year,will have no choice this year as mobile devices proliferate. Financial institutions already are scrambling to accommodate banking on iPads and other tablets, and they will get increased pressure from consumers who want their transactions made easy, no matter which device they use. Credit unions will see more people depositing checks remotely and fewer consumers will carry cash. One trend to watch for: security developments to make these new mobile transactions are more secure. Security is still the No. 1 reason why people hesitate to use their tablets and smartphones during transactions.
- Marketing will continue to morph toward social media. While credit unions will continue using traditional marketing channels to deliver the credit union differentiation message, more credit unions will encounter potential members who don't use traditional sources to get their information. Expect to earmark more marketing dollars to fine-tuning use of social media channels and exploring nontraditional ways to market. Marketers will also see a push to get a broader membership that may include nontraditional members. For example, Central Wisconsin FCU, Plover, Wis., is using untraditional data to widen its membership base. When approving a loan, it looks at the traditional bill payments history, but it is also examining data with payday lending history (American Banker Dec. 28).
- Credit unions may offer deeper services for members who own small businesses. A member business loan may not be enough today to keep the member's business at the credit union. Small businesses want more help with analyzing their financial performance data. For example, Sun Trust Banks, has begun offering businesses services that a business's chief financial officer would typically perform (American Banker Dec. 28). Credit unions serving member businesses may want to ante up more services to this segment.