This past week leaders from the credit union industry came together in Palm Beach for the winter AACUL conference to discuss the state of the industry and priorities for next year. League presidents, CUNA, CO-OP, CUNA Mutual Group, and other system partners were all present for the week-long event. LSCU & Affiliates Chairman Mary Ott Wood welcomed the group. As always, these meetings tend to have lots of talk about credit union vs. bank issues. I found it interesting that last week Accenture released a study that showed banks could lose 35 percent of their market share in the next six years and possibly 25 percent of banks could go away completely. The study had some interesting nuggets of information, as well.
The crux of the study is that bank customers want branches, but online and smart phone services are growing weekly. Each time a branch is closed--390 were shuttered in the third quarter--the study finds that two-thirds of customers find it inconvenient and half say they would switch financial institutions. This is a concern for banks since it takes about $2 million to open a new one. The study found that the 25 largest financial institutions spend in excess of $50 billion maintaining 43,000 U.S. branches. This is weighing heavily on their profits.
Another area where banks are feeling the heat is through Wal-Mart and American Express’ Bluebird program. Sound familiar? Amex says that its Bluebird accounts have grown to more than one million in less than a year. Customers can make deposits at ATMs at CVS and 7-Eleven, as well. You can see that this is a legitimate threat to all traditional banks, as well as credit unions. The study finds that banks are behind non-traditional providers when it comes to the customer experience.
Auto loans have long been the bread and butter for credit unions. Two weeks ago NCUA Region III Director Herb Yolles told our Leadership Development Conference attendees that auto loans are up and credit unions have a great opportunity. The study found that 68 percent of customers go outside the bank for auto loans, while 53 percent go outside the bank for credit cards. These are two excellent statistics that show growth opportunities for credit unions. Consumers are searching for these services so it makes total sense for credit unions to market these in their communities.
I would recommend that you read Forbes story on the Accenture study. While it isn’t a fact that banks will lose 35 percent of market share over the next six years, we have been seeing it slowly erode. Credit unions continue to have opportunities to strengthen their place in their respective communities. Be bold with your marketing initiatives as you look to 2014.
Where's Patrick: I’ll be in working out of our Birmingham office this week with several internal and external meetings on tap. To see my complete schedule for the next two weeks, visit the LSCU Information for Credit Unions webpage.
Visit the LSCU & Affiliates YouTube page to see the President's Quarterly video.