Credit Union Survey Reveals Current Burdens and the Need to Share Services

In an effort to learn more about the changing credit union landscape and key issues of executives, CU Service Network partnered with Edge (Kordeleski) Consulting to compile a comprehensive survey on Shared Services and pain points. Sixty credit unions in the Rocky Mountain and Plain States, ranging from $30M to $1.6B total assets, participated in the survey.

One question in particular illustrated the increasing pressure on credit unions and the need for collaboration-mindedness. The question referenced top issues facing credit unions in the next five years, and how critical each of those issues were to the participating credit union based on a scale of “completely agree” to “strongly disagree.” The issues were as follows:

  1. Compliance Burden
  2. High Expense Ratio
  3. Loan Growth
  4. Skills Shortage
  5. Membership Growth
  6. Cyber Security

The issue that proved to be on most of the participants minds was compliance burden. 98% of participants agreed that Compliance Burden was a top critical issue facing credit unions. This is a crystal clear indication that compliance is weighing heavy on credit union executives minds, as the requirements, audits, and regulations on the credit union community have increased with a fury in the past few years.

In second place to Compliance Burden was Cyber Security – no surprise there. In fact, not one participant disagreed or was neutral about this issue. Again, a staggering indication of what keeps execs up a night.

And the rest of the issues? High Expense Ratio, Loan Growth, and Membership Growth all ranked similarly, as 50% to 70% of participants agreed on their urgency.

Skills Shortage, with 27% of participants completely agreeing and 46% agreeing that it was a top critical issue, is often a regional issue that affects more rural locations. Albeit, where it does hit, it hits hard –there is simply not enough skill sets in the communities where these credit unions reside.

The consensus of the study indicates that reducing pain points will require an effort greater than the resources available in individual credit unions. For example, improving expense ratios requires new approaches to reducing expenses. Likewise, reducing compliance burden and improving cyber security also requires new approaches.

This is where sharing services became intriguing. A number of credit unions have created CUSOs to address specific operational needs. However, there is growing interest to manage all non-member facing functions by sharing resources. Much like the Canadian Desjardins model, individual credit union expenses are significantly reduced by efficiently sharing resources.  But delivering these services requires a dedicated collaboration effort and someone to focus on delivery.

Throughout 2016, CU Service Network has been researching models for expanded shared services that address the pressing issues in this survey, like compliance. CU Service Network currently provides shared services in Accounting and IT, but realizes that credit unions are taking a hard look at how to respond to these issues for 2017. Credit unions have a history of collaborating, but the question remains:  are credit unions willing to work together at a very deep level to realize economies of scale in these most critical areas.

dougABOUT THE AUTHOR: Doug Burke is the founder and President/CEO of CU Service Network, a CUSO that was founded in 1992 to bring shared branching to credit unions in Colorado and Wyoming. Today the CUSO focuses on Research & Development, collaboration in the CU community, and innovative ideas to benefit our credit unions.