Credit union values expected to increase

What will your credit union look like in 25 years? Will there even be credit unions then? These are questions being examined in by Peter Strozniak, writing in Credit Union Times. He turned to credit union experts to answer them – or at least to speculate. The consensus is that there will be credit unions in 2040 but they will be quite different that the ones we know today.

For one thing, there will be fewer credit unions in the future, and the ones that remain will typically be bigger than today’s credit unions. Also, there will be half as many credit unions in 2040 as there are today.

Strozniak points out that there were 14,549 U.S. credit unions in 1990. Today, there are about 6,000. By 2040, he speculates, there will be just 3,000 credit unions.

Consolidation in the credit union industry is driven by the need to survive and compete with a commercial banking industry that has great resources – and seems to use a considerable amount of them attacking credit unions.

Threats from banks

The banks, through their lobbying groups, have been engaged in an all-out assault on the tax exempt status of credit unions. Fighting this fight drains the (much scarcer) resources of credit unions.

Credit unions also have to compete with banks in a number of expensive ways, most recently by deploying mobile banking systems. Credit unions must do this while operating within a not-for-profit model. For these and other reasons, smaller credit unions are finding it very hard to compete. Many find that their best option is to combine with another credit union in a merger. Hence, the industry consolidates, and each year there are fewer credit unions.

Great Recession of 2008

New types of financial services firms will pose a huge challenge to credit unions. These new financial firms don’t have the overhead of traditional credit unions and banks, and they make lending simple and direct.

Strozniak believes that financial-technology startups will siphon billions in profits from traditional banking services in the future. They’ll compete with credit unions in areas that credit unions depend upon, such as at auto lending – and eventually mortgage and business lending.

Still, not-for-profit rocks

So, with all these challenges, how will credit unions survive? Right now, the model for success involves consolidation but competing with new business models like peer-to-peer may require further changes.

The idea of not-for-profit, community-based, member-owned cooperative banking should still appeal to millions of people. The mission of credit unions remain unique because the focus continues to remain on helping people first.

What about Travis?

Just like credit unions across the U.S., Travis Credit Union has its unique history. Just who is the Travis in our name? Find out by reading the history of General Robert F. Travis.