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How to Create a Strategic Plan

Looking for a way to take your company in a new and profitable direction? It starts with strategic planning. Keep reading to learn what a strategic plan is, why you need it and how you can strategically create one.

What Is a Strategic Plan?

When it comes to business and finance, strategic planning will help you allocate your resources, energy and assets. When implemented, a strategic plan will begin to move your operations in a more profitable direction. The primary goal of the plan is to ensure you and any other stakeholders are on the same page and striving to reach the same goal.

Creating a strategic plan requires a disciplined effort. Once you put the plan into action, it will influence the segment of customers that you target, how you serve those customers and the experience those customers have.

Assess the Current Infrastructure and Operations

The first step in creating a strategic plan is to carefully assess your existing infrastructure and operations. You can do this through a SWOT analysis, which is an analysis of the company’s strengths, weaknesses, opportunities and threats. The goal here is to pinpoint the resources that you use to carry out your day-to-day operations, to look at your monthly revenue patterns, to list any company challenges related to the customer experience and, most importantly, to look at your marketing methods and ways to improve the overall customer experience.

Creation of Mission Statement and Objectives

The next step is to create a mission statement. You may already have one, but it’s important to note your mission at the top of the strategic plan document you create. This ensures everyone is focused on the same goal. Your mission statement should cover why you started the company and what you intend to accomplish through the products and services that you offer.

In addition to the mission statement, make sure to outline both short- and long-term objectives. List the objectives according to their priority and designate certain managers or employees to be responsible for each one. Also, jot down the resources that will be used to achieve each objective.

Measure Performance

Now that you know what you’re trying to achieve and who is responsible for each goal, it’s time to deploy the plan and measure its progress. A weekly meeting is extremely important for all managers and stakeholders provide feedback. Your goal is to determine if the company is headed in the right direction. If not, you’ll need to revise the strategic plan accordingly.

Strategic Plans Are Ongoing

Once your strategic plan helps you achieve several objectives, it’s smart to regroup and set new objectives. As your company grows, you can set new goals to ensure the company keeps moving forward. You can share the success of your strategic plan with potential investors as a way to tap into new capital funding.


credit union strategic planning ideas

7 Incredible Benefits of Joining a Credit Union

credit union strategic planning ideas

Joining a credit union offers many benefits for the average person or small business owner. There are over 5000 credit unions in the country, with membership covering almost a third of the population. Unlike the really big banks, credit unions typically have an intense local focus, giving them the ability to form stronger relationships.

While you might think a major bank will cover all your financial needs for the future, a credit union may sometimes prove the superior option. This is because credit unions know you and tend to exert more effort to tailor solutions to your exact needs. For small business owners and even private individuals, joining a credit union can open the door to many sizable advantages.

Access Business Loans

A local credit union typically has the creation of loan facilities as a major part of its mandate. For example, in the state of Texas, the Credit Union of Texas has a special focus on issuing loans and credit cards, among other things, to Texas residents. This makes it easier for Texans of every background to apply for loans and credit. If you are a small business owner looking to finance your operations, joining a credit union in your area can give you unprecedented access to loan opportunities.

Get a Mortgage or Refinance One

Mortgages are another major area of activity for local credit unions. Georgia’s Own Credit Union, for example, offers a wide array of mortgage products for families in the state. With branches all across the state, from Atlanta to Savannah, financing a home is easier for Georgia residents when they work with Georgia’s Own Credit Union.

Credit Unions often have organizational goals other than making a quick buck. These goals often include developing the local area and helping the local population get ahead financially.

Build up Your Credit History

Working with a credit union is an excellent way to build up your credit history. The combination of financial activity that you can conduct with a credit union will tend to build up your profile as a financial actor. Savings accounts, checking accounts, debit cards, loans, and other transactions all serve to beef up your credit history. After a few years of working with your local credit union, you can have a stellar credit score that you can deploy in pursuit of your financial goals.

Form Financial and Business Relationships

While its significance is not immediately obvious to the first time business player, establishing warm relationships with a financial institution can pave the way for your business. You might not need business loans or financing now, but in future, your business may need it. It’s much harder getting a financial institution on your side in a pinch than if you already have a long-running business relationship.

Attend Networking Events

Many of the nation’s credit unions hold regular events where members are welcome to attend. At these events, you can learn everything from how mortgages work to personal financial planning for you and your family. The benefits of such events, when they occur, go far beyond what you might readily realize. For example, events give you a great opportunity to network. You also get a chance to take in ideas from speakers and other members of your local community who have a wealth of experience.

Learn How to Build Your Wealth

One of the more elusive but real benefits of joining a local credit union is the ability to better meet your personal finance goals. For example, if you have been struggling financially and need a trustworthy financial advisor, your local credit union is a good place to call.

Working with a local financial advisor gives you access to someone who is familiar with your town and can help you spot opportunities you can take advantage of locally. The result is that you can make more progress, and faster, than you ever could on your own.

Save for Important Events

A local credit union can help you with savings accounts and packages to help you prepare for important financial events. For example, you can open savings accounts or put in deposits for CDs that you will be able to recoup, with interest, to pay your children’s college tuition. If you are about to retire, a credit union can help you with savings accounts that help grow your capital while minimizing expenses. On the whole, working with a credit union in your area can unlock doors to the whole range of financial success.


credit union strategic planning ideas

credit union strategic planning ideas

Understanding the Credit Union Strategic Planning Process

credit union strategic planning with cu 2.0

What is a credit union strategic planning process and why should you use one? What kinds of topics should you discuss? Who should be involved?

If you are a new credit union executive or are thinking of doing your first credit union planning session, read on! This article outlines the process and methodology that other successful credit unions use.

Credit Union Strategic Planning Process

A strategic plan is a key tool for your employees, leaders and board members to make sure everyone knows where the credit union is going and why. The strategic planning process is a series of steps your credit union takes to determine its:

But what is the point of credit union strategic planning? In our experience, there are five main reasons:

The process used to create your credit union’s strategic plan is every bit as important as the plan itself. Then, the method for communicating, updating, and re-evaluating it is essential.

Ultimately, we all have more things we want to do than resources allow. Consequently, it’s important to prioritize and make tough choices that will can deliver and take your credit union to the next level.

Four Key Considerations

There are four questions you should ask before (or at the beginning of) any strategic planning session. Your answers to them should give you a solid outline by which to develop a plan. These questions are:

If you begin your credit union’s strategic planning process without answering these four questions, you may not get far. Or worse, you might finish your session only to find that your plan lack cohesion or definite direction. You wouldn’t want to be scattered or pulled in too many directions!

The Seven Steps to Credit Union Strategic Planning

The following are the main steps to the planning process:

1. Gather Inputs

In this first stage, gather what worked in the past. Compile performance data, staff surveys, member surveys, and more.

Also consider, what are the outside factors? Are there any community, political, SEG, economic, social, regulatory, or technological issues to worry about? What keeps you up at night?

Try a SWOT exercise. Review your strengths, weaknesses, opportunities, and threats. Make sure you know how all internal and external factors might impact your credit union.

2. Establish Vision

What will your credit union look like in five years?  What is the “Champagne moment” when you get there? Is it your number of members, your loan portfolio, etc.?

Why is this important? What will the impact be if you get there?

3. Review Mission

Why was your credit union created? What is your mission? Why is that important and who is it for?

CU 2.0 highly recommends creating a painted picture to reveal and expand on these key questions. As leaders, we feel often that we have better intuition—that in fact, we just know intuitively where we are going. But communication is critical! The painted picture helps the rest of your team understand your direction… and how they can help your credit union get there.

4. Determine Values

Every credit union should have explicit values. Furthermore, everyone at the credit union, from executives down to the tellers, should agree to and understand these values.

What are the values of your credit union? Is it “people helping people”? Is there more to it than that?

Consider as well, which behaviors do your best employees exhibit? What won’t be tolerated? What is it like to be an employee at your credit union?

5. Competition and Roadblocks

Unfortunately, the path forward is rarely straightforward. There are twists, turns, bumps, detours, and roadblocks. Failing to account for these issues will throw off the entire credit union strategic planning process.

Ask, what could go wrong? What might change in the marketplace? Which competitors should we watch and learn from? Which should we watch and avoid?

6. Priorities, Goals, and Tactics

This is where the fun begins. Take the big picture and tie it into your credit union’s strategic planning process.

Make a list of priorities and action plans that align with your vision. Prioritize the key items and build a timeline, goals, and measurements.

7. Communication Plan

Finally, it’s time to get everyone else on board. Ask, who needs to know? What should we communicate? What are the key milestones?

Build a communication plan to board members, employees, and members. It should let everyone know what’s coming, where you’re going, and how you’ll know when you get there.

Finding Credit Union Strategic Planning Facilitators

Kirk Drake and Chris Otey take a unique approach to planning sessions. Their goals are to deal with some of the real issues facing credit unions. These include:

As author of multiple books about credit unions, technology, and strategy, head of a large tech CUSO, and founder of CU Wallet, Drake has great insights from both his time working at a credit union through his entrepreneurship and board experience.

As board chair of South Bay Credit Union and former CU Wallet and Fiserv executive, Chris has worked with hundreds of credit unions to help them deal with board governance, CUSOs, and other technology challenges.

Contact us to discuss if we’d be a good fit for your credit union’s next strategic planning session.

Want to know the other options in the industry?  Click here for the Facilitators Guide

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2022 Planning Priorities for Credit Union Growth

By Preston Packer

strategic planning

Culture eats strategy for breakfast

The last couple of years have been hard on everyone, and credit unions have been no different. From the fear and uncertainty associated with COVID-19, the blink-of-an-eye shift to digitization, home school complications, and a tumultuous political environment, it's extremely hard to predict—or even fathom—what's next. No matter the case, your credit union must move forward.

One excellent way to get everyone in lockstep is to engage your members and staff with a renewed sense of optimism and purpose. While this approach may seem intangible and less concrete,  focusing on the relationship  aspects of organizational development and creating a vibrant culture can be the fuel that drives everything else. In other words, culture trumps strategy, every time.

Your culture is the invisible glue that holds your credit union together. However, this invisibility often prompts leaders to treat culture as a softer, less-important topic. Nothing can be farther from the truth. As such, you can amplify your planning session and year by creating a well-defined organizational purpose statement. An effective purpose statement can reposition the "why" for your credit union and place it front and center.

Creating a purpose statement with/on purpose

The organizational purpose statement is the overarching, motivating force that moves, guides, and delivers your credit union to a perceived goal. Your purpose is the fuel, force, bond, and intangible link that pulls your credit union together to achieve success. Very simply, your purpose is why your organization exists; and it is the quintessential component of your culture.

For example, any employee working at NASA back in the 1960s knew without a shadow of doubt the purpose was to get a man on the moon. What's your credit union's " moon shot? "

To develop a real purpose and reap its transformational effects, leaders must dig deep—deeper than ever before. This level of depth can't be left to clever words during a brief planning meeting. It mandates expertise to evaluate your credit union's cultural distinctions, unique strengths and overarching goals. And when you get it right, it can act as the yellow brick road to long-term, sustainable success.

Simplify, streamline, and focus on what really matters

Far too often, planning sessions result in laundry lists of hopeful projects. Yet, most teams are not properly equipped to manage deadlines, ROI, and results. At the end of the quarter or year, a fraction of those strategic initiatives have been completed. This can have a negative impact on everyone. Simply put, most people desire a sense of completion, which is why checklists are so effective and popular. It's psychologically and emotionally inspiring to see things through to completion and mark them off the proverbial list. Because of this, you can strategically target:

One way to get into the right frame of mind is to ask "What are the most mission-critical initiatives that will bolster performance and key goals, such as improving member retention and adding value?" Discovering ways to prioritize operational vs. foundational projects is undoubtedly an art. Properly identifying project champions and freeing up their capacity by removing time-leaching workflows can allow them to focus on the projects that matter. And this can be one small step and a giant leap in the right direction at the same time.

Understand & delight your members

As a credit union, one of your key competitive advantages is your member service and relationship building. And this isn't just marketing or positioning. Since 2008, credit unions have outscored banks in the American Consumer Satisfaction Index (ACSI) by a substantial margin. However, in 2018, the two —banks and credit unions — were tied. In 2020, credit unions dropped 2.5% to a score of 77 out of 100, which meant credit unions trailed banks by a whole point. Even more alarming, this was the second year in a row credit unions ranked lower than banks in the ACSI survey.

Although the biggest drop in score was the "courtesy and helpfulness of tellers and other staff," most credit union executives cited this specific area as their top competitive advantage. To remedy this problem, credit unions need crystallized clarity on how to transition their culture of service from the call center and branch into the digital world. The key to this monumental door into the future is data.

How well do you know your members?

In a highly-digitized,  data-first environment , your members expect you to know them. They have been conditioned with personalized solutions from popular video streaming platforms and almost every other service they use today. Why should their banking experience be any different? In 2022, getting to know and understand your members on a deeper level must be at the top of your strategic planning list. Specifically, you should seek to understand:

Harnessing  member data points and insights while leveraging segmentation and personalization capabilities are the most important tech investments credit unions can make. However, most credit unions are light years behind in terms of technology and infrastructure. Without the necessary data, you are left guessing what your members really need and want. For instance, you should be able to answer:

While some of these questions can be answered by  understanding key generational trends , it's important for your credit union to go beyond the surface to deepen relationships. To achieve these types of nimble decision-making advancements, you must leverage member data analytics for use in adapting actions and strategies. Unveiling valuable insights about your prospects and member lifestyles and needs are both key to personalization and being competitive in today's environment. Simply put, now is the time to place member data analytics front and center in your planning.

Gain the edge in 2022 with FLEX

As we head into 2022, the expectations for easier, faster, simpler, and more personalized experiences are at an all-time high. Does your credit union have the technology and infrastructure to thrive in this environment? Fortunately, FLEX can help. FLEX offers an array of tech-first solutions designed to differentiate your credit union with unique offerings that members want. Our core credit union technology has been integral in helping credit unions of all sizes thrive in the digital age, while elevating the digital and in-person member experience to the next level. Ready to learn more? Download our Member Onboarding eBook and Best Practices Guide.

Member Onboarding eBook

Topics: Core Technology , Internet Banking , Mobile Payments , Security , the credit union difference , credit union growth , digital lending , credit union trends , customization , member onboarding , Digital-Only Banking , member experience

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Credit Union Business Plans and Meeting Facilitation

Strategic planning.

Nothing gives us more satisfaction than guiding credit unions to increase service to members and improve financial performance. We facilitate inspiring, transformative meetings.​

Why hire CU Strategic Planning to facilitate your meeting?

Invest your staff.

Inspire your board.

Improve your financials.

Make transformative moves with support from your examiner.

Our proprietary strategic planning process includes:

Introductory call to review your vision, financial ratios and current priorities.

Use of My Meeting Worksheet© to establish desired outcomes, issues to avoid and deeper-dive topics.

Introduction of the Credit Union International Operating Principles.

Board education on the credit union profitability model and application to your ROA.

Evaluation of threats and opportunities with our Credit Union Market Analysis©.

SWOT analysis using All Voices© and ranked prioritization.

Our 52 data-point Credit Union Market Analysis©.

Introduction of high-performing boards and self-assessment.

Credit Union Insight

Relationship between your credit union’s strategic planning objectives and your marketing strategies

credit union strategic planning ideas

Strategic plans for credit unions are created from the hard work and effort of many people, both volunteers and managers, who come together with their background and ideas, and armed with statistics and data, to layout the financial institution’s future.  

Creating a credit union’s strategic plan, is a multi-day process which involves a broad analysis and discussion which addresses the entire business structure of the credit union ranging from short-term ideas to long-range forecasts.

From Forbes Magazine : A company can promote its offerings and leverage peer-to-peer trust by amplifying customer testimonials and mobilizing organic brand ambassadors.  

The areas focused on in the strategic plan can run the gamut from branch planning, to membership growth, asset growth, loan products, operating services, technical development, and the credit union culture. Every single portion of the credit union strategic plan includes marketing, either internally to staff, or externally to existing and potential members. With top to bottom engagement in the credit union’s overall strategic plan, in theory, the ones that have successful years are those who develop their marketing plan based on hitting targets within the strategic plan.

To understand the relationship between the two, it’s important to understand the purpose of strategic planning; the planning process; the difference between goals, objectives, strategies, and tactics; and the important role of measurement in strategic planning.

The Purpose of Strategic Planning

Strategic planning is designed to provide a credit union, its divisions, departments, and individual staff or volunteers with a game plan or road map to achieve specific goals and objectives. Both internal and external effects and opportunities are identified in the strategic plan and need to be considered in the creation of strategies and tactics. From a marketing standpoint, strategic planning might help to identify new market opportunities in addition to new competitive threats.

The Planning Process with Executive Staff and Board Members

A number of people and several steps are involved in any strategic planning process. Ultimately, the marketing staff, with input from other executives in the credit union, should contribute and develop a strategic marketing plan to implement the overall strategic plan as part of the planning process or immediately afterward.  

To develop a strategic plan, your credit union will need to identify the overall planning goal, invite participants, gather data related to the internal and external environment, conduct a SWOT (strengths, weaknesses, opportunities and threats) analysis, develop specific objectives, create strategies and tactics, and design a measurement and reporting process. In many organizations, the overall strategic plan provides direction for the creation of sub-plans. Here is where the strategic marketing plan development comes into play.

Goals, Objectives, Strategies, and Tactics

The components of a strategic marketing plan include goals and objectives as set forth by the strategic plan and, strategies and tactics to meet those goals and objectives.  

Goals are broad and provide general direction in terms of what the credit union and the marketing component would like to achieve, for example, an increase in non-interest income. Objectives are tied to goals and provide more specific, measurable outcomes — for example, increase membership around a specific branch for a specific product, by a certain amount or by a specific date.  

Strategies and tactics indicate how goals and objectives will be met. Strategies are broad: for instance, implement a social media strategy. Tactics are more specific and indicate the individual tasks to achieve the strategies — for instance, set up a Twitter account or establish a YouTube channel.

The Important Role of Measurement

It is not enough to create plan; your credit union’s strategic plan must include a way to determine measurement of the goal and a process for monitoring and reviewing results. An overall strategic plan might outline broad objectives for marketing; the marketing plan would detail more specific objectives for the marketing department to monitor and report on. The results achieved — whether they fall short or exceed expectations — provide input used to consider changes or adjustments in the plan. Ongoing measurement and reporting can help to ensure the strategic plan continues to achieve measurable results.

Developing your Marketing Strategy

Developing a marketing strategy with your credit union’s strategic plan as the guideline, helps you focus on how you will sell your financial institution’s products or services.  

However, your goals, and how you intend to reach them, may change as your credit union changes from year-to-year. For that reason, your marketing plan should be reviewed annually to update your implementation strategy. The beginning of a new calendar year is a good time for this exercise.

What’s the “Why” of the Marketing Plan

The purpose of your marketing plan is to outline how you will reach your target audience and sales goals for each branch and department of your credit union. To do this, it is critical to develop a strategy to promote your products or services. Placing details in your marketing plan helps you analyze its success at a later date and update it as needed.  

For example, if your target customer is a teenager to grow youth accounts, and you initially planned to promote the credit union to that demographic on social networking sites, examine whether you met your marketing goal and if it was productive. It might be more successful to promote youth accounts to parents or grandparents who realize the value of a savings account.  

Components Needed in a Marketing Strategy or Plan

To develop your marketing plan and strategy for the year, review your progress from your last plan. If you don’t have one, create a template of what products were promoted last year by advertising and promotions in each of the credit union’s business areas. Read through your credit union’s strategic plan for guidance prior to creating a strategy for marketing. Once you’ve established where the credit union wants to position itself in the coming year, figure out how you’ll get there through your marketing plan. Focus on seasonal sales and how to improve during lulls and busy times. Repeat the strategies that were most effective and include the cost estimates for each one. Look at your competitors in the market including other credit unions and banks to see what they promoted throughout the calendar year. A good competitor file is key for understanding how their marketing plans evolve.  

Rolling out the “New” Marketing Plan

Once you understand what you need to accomplish to grow the credit union based on the strategic plan and through your new marketing strategic plan, implement your strategy by matching the strengths and talents of your coworkers or marketing firm to different segments of your plan.  

For example, if a goal is to increase your online presence, you might have a staff member with experience and success with web content, advertising and social media who can take the lead. Understand from your member research what social media sites they frequent and where to reach each demographic. While Facebook is a must for some people, Instagram is the medium of choice for others. Don’t forget to engage your members on LinkedIn, too. It extends a professional profile for the credit union.

Explaining your annual marketing plan to the marketing staff helps them understand why they are assigned to certain tasks and how their efforts benefit them and the credit union. Also, ask them to develop this strategy with you. If you have a one-man operation, talk to your branch managers or operations people to determine key aspects of your plan. What might work at your branch close to a business center might not work for a branch in a smaller community.

Analyze and Review your Marketing Plan Often

Once your annual marketing plan is updated, it must be reviewed periodically throughout the year. Look at your goals and the strategy you developed to achieve them and determine if you are on track for reaching them. Ensure that you are accomplishing the strategic plan, and you do not need to make any changes to it due to unforeseen circumstances, such as the competition opened a new branch in the same block or your go-to radio station was sold and changed its format. This process is ongoing, so your yearly marketing plan and strategic goals must be revisited regularly, such as every quarter, to help you analyze its success before the year is over.

To help create the tactical side of your marketing plan, you can find great resources on the internet that have been successful for other companies, including 45 Marketing Ideas for Small Credit Unions .

On top of reviewing your marketing plan quarterly – set yourself up for success by developing an ICE plan alongside your strategic marketing plan.

Hilary Reed

Hilary Reed

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Here Are a Few Big Strategic Questions for Credit Union Leaders

credit union strategic planning ideas

The United States has more than 4,800 credit unions with total assets amounting to $2.14 trillion. Meanwhile, nearly 88,000 credit unions have served more than 393 million members worldwide as of 2021.

With such numbers, operating credit unions is no longer a small-scale cooperative venture. Decision-makers must adequately plan and strategize to guide their organizations forward.

What’s the importance of planning and strategy for credit unions? What strategic questions should you address if you manage a credit union and want to improve your services?

This article lists and discusses the questions credit union leaders should ask to help improve their businesses. This article also explains why strategy and planning are essential for financial providers like credit unions.

Strategic Questions Credit Union Leaders Should Consider Asking

Credit unions may have fewer financial options and physical locations than traditional banks. Still, these unions can offer relatively better rates.

Through strategy and planning, credit union leaders can improve and provide high-quality financial services to their members despite the limitations.

For example, working with credit union members to create a debt management plan, like those offered by credit card settlement companies listed by Credit Summit , can help these individuals settle their debt conveniently.

Businesses, including credit unions, conduct strategic planning to help them define their vision and objectives. Strategic planning also helps the organization identify targets and what the company aims to achieve in the short and long term.

Part of strategic planning is to ask and address questions relevant to what the organization wants to achieve. If you’re part of the credit union leadership, such questions can involve products and services your organization offers or plans to offer.

As such, you should consider the following strategic questions to help give direction to your organization and stay relevant to the members’ needs:

Your organization’s objectives 10 or 20 years ago may not be relevant today. You may have achieved them already and now require a new set of goals.

Part of strategic planning is to help your organization develop goals and objectives that align with current trends and maintain a competitive advantage.

For credit unions, these goals can include achieving new earning targets, additional memberships, property acquisitions, or new products and services. For example, if your current membership is around 5,000, consider increasing it to 10,000 within five years.

Allocating a sufficient budget is necessary to ensure that specific programs are well-funded without spending too much or too little.

If you’re running a nonprofit credit union, your budget will probably be minimal. But with the correct strategic planning, you’ll likely achieve your program goals without exceeding that budget.

For instance, if your organization’s objectives include supporting credit-related research, you may want to allocate enough funding for this project.

Customer satisfaction can help a business gain loyalty, improve sales revenue, reduce marketing expenses, and boost reputation. Your credit union can also experience these benefits if your members are satisfied with your services.

One way to improve member satisfaction is through a member experience program.

This program involves improving talent management strategies, leveraging member data, and working with partners to address pain points (specific customer problems) preventing member service improvement.

As technology advances at breakneck speed, the risks and security threats also increase. In 2022, a data breach in the U.S. had an average cost of $9.44 million.

With so many businesses, including credit unions, relying on technology to provide the necessary services to customers and members, the importance of cybersecurity to prevent data breaches and other threats cannot be emphasized enough.

Thus, if your credit union has significant information technology (IT) assets, like database servers, mobile apps, and member management systems, consider developing strategies and allocating enough resources dedicated to cybersecurity.

Importance of Strategy and Planning for Credit Unions

Like any other business, a credit union must have organizational goals to work on to help give it a sense of direction and purpose.

Strategic planning can provide that guidance by helping the organization create a roadmap to achieve those goals. This roadmap can help the business find it easier to keep track of its goals.

Credit unions face many immediate challenges due to a lack of strategic focus and multi-year planning. If you do not address these challenges, your members will likely become the biggest losers.

Developing a sound strategic plan can help prevent or minimize such challenges from carrying over to your members. One way to establish this plan is to address the questions relevant to your industry and organizational goal.

Successful implementation of your strategy can benefit your members and increase the likelihood of them being satisfied with your services. In turn, this satisfaction can lead to increased revenue and member loyalty.

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What strategic choices are credit unions making to drive growth?

A woman and a man holding coffee cups smiling

By Steve Heusuk, Senior Manager, Customer Intelligence

In " The credit union value proposition is under fire ," we learned that competition from major national banks and other competitors, such as challenger banks, captive auto finance companies and lending startups, is beginning to adversely affect credit unions’ share of primary financial institution (PFI) relationships and market share for certain loan types including auto loans and personal loans.

To better understand credit unions’ efforts to remain relevant and continue growing in the face of this competitive threat, TruStage commissioned a research project to explore the strategic choices of credit unions. This research was heavily based on the book,  Playing to Win: How Strategy Really Works , which describes an integrated cascade of choices that companies can use to develop their strategy (see Figure 1). 1  Per the author, the responses to these five questions collectively comprise the strategy of a firm: 1 — What is our winning aspiration? 2 — Where will we play? 3 — How will we win? 4 — What capabilities must be in place? 5 — What management systems are required?

Integrated Cascade of Choices Infographic

Our research focused on credit unions’ choices related to the middle 3 questions: "Where will we play?", "How will we win?" and "What capabilities must be in place?”. Executives from 183 credit unions with total assets > $250M participated in this research. By matching participants’ survey responses to their credit unions’ NCUA 5300 Call Report Data 2 , we were able to examine how top-performing credit unions’ responses differed from other credit unions.

Credit unions’ “Where will we play?” choices

We first asked credit unions whether they've grown through expansion into new counties or states. Figure 2 breaks out credit union executives’ responses by asset category. 3

Growth Through Expansion into New Counties/States Infographic

Note: Respondents were free to respond or check multiple categories, so columns will not sum to 100%.

We see that roughly two-thirds of the smaller credit unions we surveyed, i.e., those with $250M-$500M of total assets, indicated they had not engaged in any expansion into new counties or states before or during the pandemic (1/2018 –  4/2021), nor do they plan to do so by the end of 2022. By contrast, less than one third of the large credit unions, total assets >-$1.25 billion, did not expand into any new counties or states before or during the pandemic, nor do they have any plans to expand by 2022. These results suggest that a common growth strategy of larger credit unions has been to expand into new geographies through either a charter change or mergers/acquisitions.

Next, we explored credit unions’ choices to grow through mergers and acquisitions (M&A). We used NCUA data to understand credit unions’ past M&A activity and the survey to ask about future merger plans. As shown in Figure 3, nearly one out of four credit union executives surveyed had engaged in M&A activity prior to or during the pandemic. Fifteen percent of respondents indicated their credit unions are planning to do so by 2022. These credit unions could represent the start of the surge in merger activity that our Chief Economist, Steve Rick, is expecting to take place between 2022 and 2024.

Past Merger Activity and Future Plans Infographic

Note: The overlap in Figure 3 represents the 5% of our 183 respondents whose credit unions merged in the pre-pandemic period or during the pandemic AND are planning to merge again by 2022.

“Where will we play?” is not only about credit unions expanding their total addressable market through geographical expansion or mergers. It's also about their choices of channels used for distribution and the products they offer. One of our survey questions asked study participants to name their Top 3 distribution channels in the pre-pandemic period and what they expect those Top 3 to be in 2022 (see Figure 4). 4

Top 3 Distribution Channels Infographic

There were some statistically significant differences between the Top 3 distribution channels in the pre-pandemic period and the expected Top 3 in 2022. For example, the percentage of credit union executives considering mobile apps or online via a tablet or smartphone to be a Top 3 distribution channel increased significantly. By contrast, significantly fewer study participants expect branches and call centers to be a Top 3 distribution channel in 2022 compared to the pre-pandemic period.

Interestingly, some credit union executives expect partnerships with fintech lending platforms to grow in importance. These partnerships represent a new distribution channel by originating loans on credit unions’ behalf. The percentage of credit union executives saying these partnerships were, or will be, a Top 3 distribution channel grew from 3% to 16%.

Next, we explored credit unions’ Top 3 sources of revenue prior to the pandemic and what they expect will comprise their Top 3 in 2022 (see Figure 5). 5

Top 3 Contributors to Revenue Drivers Infographic

Unlike what we observed with the Top 3 distribution channels, there was a great deal of stability in credit union executives’ responses between the two timeframes. There were two notable exceptions:

First, there was a significant decline in the percentage of credit unions expecting non-sufficient funds (NSF) courtesy pay fees to be among their Top 3 revenue drivers in 2022 compared to the pre-pandemic era. The following factors may help explain this decline:

The second exception was an increase in the percentage of study participants expecting sales of whole loans or participations to be one of their Top 3 drivers of revenue — up from a low base of 4% during the pre-pandemic era to 11% in 2022.

Credit unions’ “How will we win?” choices

To understand credit unions’ “How will we win?” choices, we explored their current, self-reported Top 3 sources of competitive advantage. The twelves sources of competitive advantage receiving the highest percentage of 1,2 or 3 rankings can be found in Figure 6. 6

Top 3 Sources of Competitive Advantage Infographic

Credit union executives citing member service as one of their leading sources of competitive advantage is troubling because according to the American Customer Satisfaction Index (ACSI), credit unions are on par with or trail banks in terms of members’ satisfaction with the “courtesy and helpfulness of staff” and “call center satisfaction”.7 If credit unions no longer lead banks in terms of key service indicators, how can member services be considered the leading source of competitive advantage for credit unions?

Credit unions’ “What capabilities must be in place?” choices

To understand credit unions’ strategic choices related to their capabilities, our survey explored credit unions’ adoption of key technologies and digital capabilities. Figure 7 shows those digital capabilities with the highest adoption rates. 8

Credit Union Digital Capability Adoption Infographic

By combining the "had pre-pandemic" and "acquired during pandemic" values, we see a majority of credit unions surveyed adopted APIs for vendor relationships and partnering, digital new account on-boarding and end-to-end digital new account opening prior to or during the pandemic.

Not surprisingly, adoption of end-to-end digital new account opening and virtual or video agent chat capabilities jumped 20+ percentage points during the pandemic as shown by the yellow segments. These technologies helped support continued membership growth and remote service of credit union members during the pandemic.

Credit unions that do not yet possess a digital capability but are planning to acquire it by year-end 2022 are noted by the blue segments. Nearly half (45%) of respondents expect to adopt advanced data and analytics by year-end 2022. Adoption of personalized communications of offers using artificial intelligence is expected to grow 38 percentage points. Other technologies such as the digital new account opening and digital auto and mortgage loans, are also expected to experience solid increases in adoption by the end of next year.

Our survey also asked credit union executives what they thought their Top 3 non-digital capabilities were in the pre-pandemic period and what their expectations were for 2022 (see Figure 8). 9

Top 2 Non-Digital Capabilities Infographic

Three of these non-digital capabilities experienced significant increases in the percentage of credit union executives considering them to be a Top 3 capability during the pre-pandemic period versus in 2022: digital marketing, user or member experience design and talent acquisition & development.

Several non-digital capabilities decreased in terms of importance over this same timeframe: community relations and outreach, in-branch sales skills, expense management and traditional marketing.

How top performers’ choices differ

By examining how top-performing credit unions’ strategic choices differ from other credit unions, much can be learned about strategies that lead to growth. Before examining these differences, let’s review how top performing credit unions were defined. For purposes of this research, top performers had to:

Now let’s see how top performers “Playing to Win” choices differ. 10

Geographical expansion/mergers

Top performers tended to be much more active in expanding their addressable market through geographical expansion and/or mergers during the pre-pandemic period. However, merger plans for 2022 seem mixed, i.e., top performers in terms of membership growth and loan growth were significantly more likely to have plans to merge. However, top performers in terms of 2020 ROA performance were significantly less likely to have plans to merge by the end of next year.

Distribution channels

Top performers also anticipated major shifts in distribution channels prior to the pandemic. They were significantly more likely to mention the following as Top 3 distribution channels prior to the pandemic:

Considering future expectations, top performers were more likely to say the following would be Top 3 distribution channels in 2022:

These results are particularly interesting considering the well-documented shift towards digital channels during the pandemic. Could top performers be expecting a return to more traditional channels in the wake of the pandemic? By contrast, top performers were generally less likely to expect online via a computer (online banking) to be a Top 3 distribution channel in 2022.

Revenue drivers

In 2022, top performers were more likely to say the following would be Top 3 revenue drivers in 2022:

Top performers generally were also less likely to expect home equity loans/HELOCs and investment income to be a Top 3 revenue driver in 2022.

Sources of competitive advantage

Top performers tend to rely on sources of competitive advantage that are harder for competitors to copy, such as:

Top performers were less likely to cite the following as Top 3 sources of competitive advantage:

Does top performers’ lower likelihood of citing these items as Top 3 sources of competitive advantage suggest they should be considered “table stakes,” rather than differentiators?

Digital capabilities

Top performing credit unions generally adopted digital capabilities earlier than other credit unions during the pre-pandemic period. Considering future adoption of digital technologies, top performing credit unions in terms of 2018-20 ROA growth were significantly more likely to say they will acquire an end-to-end digital new account opening capability by 2022. Top performers as defined by their 2020 membership growth were also significantly more likely to say they will add a digital personal loan capability next year.

By contrast, top performers in terms of their 2020 ROA performance were less likely to say they plan to adopt advanced data and analytics and APIs in 2022. Given that adoption rates for these capabilities are already high, it’s no surprise that these top performing credit unions will be less likely to acquire these capabilities next year.

Non-digital capabilities

Top performers in terms of their 2020 loan growth were more likely to consider their strategic planning process and new product development Top 3 non-digital capabilities next year. These same credit unions, plus top performers in terms of 2018-2020 ROA growth, were less likely to consider user experience design and talent acquisition/development to be Top 3 non-digital capabilities in 2022. Finally, top performers as defined by their 2018-2020 ROA growth were less likely to expect in-branch sales skills to be a Top 3 non-digital capability next year.

This research has shown that credit unions’ strategic choices are extremely varied and there is no single path that delivers growth. Instead, growth is the result of hard strategic choices that create a winning strategy, and then successfully executing that strategy. Top performers tend to make decisive choices — to do some things and not others — at every stage of the “Playing to Win” cascade to ensure their strategy delivers unique value to members and creates a sustainable competitive advantage.

What outcomes are your strategic choices enabling?

Want to learn more?

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The credit union value proposition is under fire


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