Top 10 Credit Union Strategy Challenges

By Jeffrey Paille, on September 21st, 2022

You’ve been talking about your credit union’s strategy and overall direction. There are several factors that must be considered as we continue to plan and navigate through the post-pandemic world of change and uncertainty. Below, we have outlined 10 of the most challenging items for credit unions to consider as they craft overall strategy, as well as some primary questions that should be addressed on each topic:

1.) Growth

    It is important to consider whether you are proposing to do something truly different or if you are just assuming that you (and your existing personnel complement) will do more of what your credit union is already doing now. What worked the last time you established a growth strategy? What didn’t? Will your people “do” growth? In today’s environment, it is especially important to articulate what growth means for your people, not just what it means for your balance sheet.

    2.) Workforce Management

      Recruiting and retaining personnel continues to be a significant challenge. Have you thought about what your employees (and prospective employees) actually want? Think about whether your people would say that the credit union, as their employer, really listens to what the employees want. And are you capable of delivering these wants/needs? With recent changes in how you interact with employees (like remote work arrangements), it is crucial to look at what risk has been created and whether that is adequately managed and what this means for your credit union’s culture.

      3.) Cybersecurity

      With cyberattacks and data security breaches continuing to grow at a record pace year after year, now is the time to ensure that you are appropriately training your people to defend themselves and the credit union against these threats. The primary cause of most cybersecurity incidents is a person on the inside (i.e., your employee) doing something they shouldn’t do while using a device connected to your network and systems. Are you spreading responsibility for cybersecurity beyond the IT Department? Are you training all employees about their responsibilities related to cybersecurity? Do you have regular cybersecurity risk assessments and follow-up on results?

      4.) Succession Planning

      Are you adequately planning for the inevitable turnover in key positions? Do you have individuals in these positions who are staying in those roles too long? Think about paid leadership positions as well as volunteer Board and Supervisory Committee roles. Be sure the board understands the benefits and risks associated with financial arrangements related to retention.

      5.) Diversity, Equity & Inclusion (DE&I)

      DE&I should be a crucial component of every business’ strategy. For employees, and therefore the organization as a whole, to reach its full potential, DE&I must be considered. Is there a group of people the credit union has been excluding consciously or unconsciously? If there is a reluctance to talk about DE&I, has there been exploration of why that is? Has DE&I been viewed in the context of growth opportunities as well as budgetary costs?

      6.) Interest Rates

      Is the credit union prepared for a continued period of (quickly) changing rates? Does the board understand what quickly rising rates mean for the credit union? Is the team agile enough to respond to quickly continued rising rates and an eventual decrease in rates down the road?

      7.) Inflation

      It is no secret that the worldwide inflation surge that began in 2021 is continuing well into 2022. Do you have a sense of how your members are reacting to rising prices? Have you planned/budgeted appropriately for the impact of rising costs (including wages) on your operating costs? Do you have members whose struggles with rising prices will require a change in your loan servicing and collections efforts and allowance for loan losses?

      8.) Current Expected Credit Loss (CECL)

      Can an accounting rule be part of a strategic discussion? In the case of CECL, the potential impact on your credit union’s allowance for loan loss and overall financial position is big enough that it deserves strategic attention. Have your people allocated enough time and energy to effectively address CECL? Have you started running “parallel” allowance calculations? If you haven’t already, now is the time to prioritize this.

      9.) The Digital Experience

      The demand for a fast and secure digital experience at financial institutions is higher than ever before. How do people perceive their digital experience with your credit union vs. others? Have you updated your thinking about who your competition is to include other options that members have on the surface of their device screen? Are you allocating resources internally to reflect the changing focus of your members and prospective members?

      10.) Environmental Impact

      Lastly, if you haven’t considered your credit union’s environmental impact, you must. It is important that you have responses to questions about this issue related to your credit union. Can you identify members who are notable as either strong or weak on environmental sustainability matters? Are environmental issues considered in your charitable efforts? Something as simple as building a new branch or making improvements to an existing facility is an opportunity to create a narrative about environmental consciousness.

      Developing a strategy for your credit union can be complex and time-consuming, so get ahead today and begin talking through the above key items. If you need further guidance or have any questions, we’re here to help. Please do not hesitate to reach out to Jeff Paille, Partner, to discuss your specific situation.

      This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.

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