The lending landscape (especially when it comes to digital lending) is constantly shifting, making it hard for credit unions to keep up. As we look ahead in 2023, there are several emerging trends within the credit union industry that credit unions should be aware of.

From new technologies to more traditional methods of attracting and retaining members, understanding the most up-to-date lending trends will help ensure the success of your credit union in 2023.

For credit unions, staying ahead of the curve can make all the difference. Understanding the 2023 lending trends is key for any credit union looking to take its lending operations to the next level.

2023 Lending Trends Landscape

According to a recent forecast from CUNA Mutual’s Trend Report, banks and credit unions should expect a “mild recession in the second half of 2023 as consumers’ excess savings dries up.”

It wouldn’t be surprising if we see the Federal Reserve raise interest rates another 50 to 75 basis points to reduce the pressures of inflation in the coming year.

There are several factors that make a recession likely this year, including these higher interest rates as well as lower prices on stocks and homes and very “satiated consumer demand for many durable goods.”

2023 Credit Union-Specific Lending Numbers

In November of 2022, that same report from CUNA Mutual stated that throughout the third quarter of that year, credit unions with assets that totaled more than $1 billion reported a 20.3% increase in loan balances, and those credit unions with assets fewer than $20 million reported a smaller loan growth (6.9%) in the same period.

The report states that overall credit union loan growth is expected to rise to 8.0% during the 2023 calendar year.

Auto Loan Trends

In the past few years, the price of used cars has risen due to the shortage of new cars coming into the consumer markets. But as that shortage shrinks and more new cars become available, used car prices will see a small decline this year, CUNA Mutual reports. This creates a great opportunity for members looking for 2023 lending trends that help them make the most of their car payments.

This fluctuation will continue at least through the rest of this year, with hopes that prices and inventory will normalize in 2024.

Home Loan Trends

When you think about the word “recession,” many of us remember the housing crisis in 2007 and 2008. During that time, many people lost equity and their homes altogether because certain mortgage lending practices ended up far overextending the loan recipients as more and more layoffs took hold around the country.

And while we will likely see a mild recession this year, the housing market isn’t nearly as unstable as it was back then. There are rising numbers of consumers and credit union members with delinquencies and unsecured loans, but even amidst these uncertainties, 52% of Americans are optimistic about their financial future in 2023.

And as younger Millennials and Gen Z continue their trend of being debit-loving, credit-averse individuals, it’s easy to see why they carry the highest levels of optimism. They work diligently to stay within their means whenever necessary, rather than extending lines of credit in hard times and struggling to decrease those debts over time.

The Rise of the Union

Amazon, Starbucks, and more – 2022 gave us a lot to consider when it comes to how Americans feel about unionization. These movements, coupled with the economic downturn, rising prices, and stagnant wages have created a perfect climate for more union efforts to take hold across industries.

Because of this, it’s important to focus on employee rights and protections as you move through 2023. There are too many open positions at your competitors and other community businesses for you to let employee relations suffer this year.

Even if you run a business in an “at will” state, there are likely several employee protections under the Fair Labor Standards Act that could affect how you manage, hire, and terminate employees in the near future.

Employee changes can directly affect the efficiency and success of your loan programs, among other things. This is why online initiatives like digital lending practices and web loan applications are becoming so popular from the credit union as employer perspective.

Data, Data, Data: Information as Investment in the Future

With rising cybercrime and distrust in institutions that hold personally identifiable information (PII), your data, both its usage and storage of it, are going to become more and more important.

Many people are sharing posts and videos about how their personal information, photos, and other data are being used without their consent based on a corporation’s terms and conditions or their privacy policy.

Because these policies are often lengthy and hard to understand, few people read them. And that gives your credit union members pause – they don’t want their personal information being used without their knowledge, and you don’t want your credit union not to be in compliance with the latest state, local, and federal edicts as well as other banking regulators regarding your business’s usage, storage, and protection of this data.

When you are thinking about your data in 2023 and beyond, we’d recommend you ask yourself the following questions.

Who has access to your members’ data? This includes third-party vendors, employees, credit union branches, and sister or partner locations.

Why do these specific people and entities have access to sensitive and member banking data?

How long do they need access to this data?

What precautions are in place to safeguard this data? This can include multi-factor authentication, levels of clearance, automatic timeouts, temporary access, retiring disparate legacy banking systems, etc.

Navigate 2023 Lending Trends and More with IaaS from IMS

Just like you can’t hop on any viral trends without a social media account, your credit union can’t navigate financial industry trends with ease or optimize lending services unless your data storage and security are in place and functioning properly.

That’s why IMS offers infrastructure-as-a-service (IaaS) to help you create and configure the resources you need to store and protect your data in secure, offsite servers.