9 Top KPIs for Credit Unions

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Credit unions are an important part of the financial services industry. As such, it is important to measure their performance and progress in order to maintain a high level of service and meet customer needs.

In the highly competitive world of credit unions, it is essential to measure performance using Key Performance Indicators (KPIs). Every organization should have KPIs specific to its organizational objectives, but there are certain KPIs that are important for all credit unions.

We recently discussed the essential network performance metrics for the financial industry. In this article, we will discuss the top KPIs for credit unions in order to provide guidance on how to measure success. We will examine how these KPIs can be used to assess operational efficiency and financial performance.

Why Are KPIs Important to Credit Unions?

KPIs, especially those that monitor sales performance and financial performance, can be great data to use and apply to your credit union’s current growth and opportunity initiatives.

But they offer more than just options for CU growth, KPIs are commonly used to:

  • Create a Culture of Learning – These metrics can help your departments and staff members collaborate and learn as they dive into KPI analysis.
  • Measure Goals – Business goals are complex. Familiarity with a KPI report that tracks your sales, marketing, or digital banking initiatives offers great insight into how you are measuring up against the goals you’ve set for your CU this year.
  • Improve Operations – Business goals and initiatives evolve over time. But your KPIs can help you with consistent measurements throughout every ebb and flow. Seeing financial systems and their cycles over time can create true operational efficiency. This is more powerful for the success of your credit union than reactionary measures or growth campaigns will ever be.
  • Provides Quantifiable Feedback – Credit union leaders know all to well the struggle of finding out “why” a certain product, service, or initiative was so successful (or so underwhelming). KPIs create data that tracks the state of your operations as you grow and change, and this can offer important feedback when you study the trends shown within your KPI reports. Now that you’re familiar with the importance of KPIs for credit unions, let’s look at some of the big ones your CU should be tracking.

Overall KPIs for Credit Unions

Your credit union has likely experienced some big changes in the last few years. And with those changes come other opportunities and obstacles you must address in order to continue growing as a business. Here are some of the top overall KPIs for credit unions.

Loan growth is the percentage change from period to period of your loans outstanding. While you can certainly drill down into the different types of loans and other lending products and services your credit union offers, keeping track of the overall trajectory of your lending programs is important.

Member growth is the percentage change of total credit union members from period to period. As big banks continue to try and use technology to wow their customers, your membership growth opportunities are going to come mostly from digital banking and customer service differentiation.

Return on assets is the annual net income divided by your average total assets. ROA is a top indicator of profitability in any business. This should, for credit unions, be more of a guide rather than an absolute indicator of success. Many credit unions are not working solely towards profitability – there are other factors and goals that may lead to less profitability but more community outreach and recognition within the geographical areas you serve.

The average member relationship is the average value of assets (loans, deposits, etc.) that an individual member has with your credit union. This KPI can be determined by analyzing your pricing strategy, underwriting policies, product mix, and more. This can also be affected by environmental factors, including the current job market and the economic environment of the areas you serve.

Digital KPIs for Credit Unions

62% of all consumers consider mobile banking apps an essential service, and nearly 3 out of 4 consumers use them as their primary form of money management. Digital banking becomes more important every year, and your credit union serves a very loyal member base (if you’ve done things right for them). That means digital banking KPIs are just as important as the traditional ones we mentioned above. Here are some of the top KPIs to watch.

Return on investment of your online platform should likely be at the top of your digital KPI monitoring. This shows you the relationship between the total amount of resources used for the platform and the total returns you’ve made from it. Upselling and cross-selling will be the drivers of most of your gains here. You can also use the reduction in cost you’ve realized since moving from paper or in-person products and services to digital solutions. It’s a great way to see the overall value of your digital programs, for your credit union and for your members.

Active clients is another strong KPI to track – this one shows you how many members are downloading and regularly using your digital applications and online banking services.

There are also several conversion-based KPIs that can help you monitor the effectiveness of your online programs. 

Number of conversions is just the total number of users who have begun the process of onboarding to digital banking apps and solutions. 

Conversion ratio is the number of members who complete the sign-up and onboarding process, and conversion time is how long the whole process takes per member. 

Abandonment rate is the number of members who have chosen not to complete the process.

These conversion KPIs can tell you a lot about which areas in your digital banking platform are performing well and helping your members the most, and which areas need to be improved upon to decrease the number of members who abandon the process altogether.

Your Data Is a Gold Mine – Keep Things Organized and Safe with IMS

The more you can use your data and the top KPIs for credit unions to glean insights on what your members, staff, and community need, the more opportunities you’ll find for growing your credit union services and membership base.

IMS offers a host of virtual private cloud services created specifically for credit unions like yours. From backups and data discovery to compliance, anomaly detection, and IaaS, we’re working hard to keep your data safe, secure, and organized. Reach out to us today or check out our website to learn more about our services.

CU Employee Retention During the Great Resignation

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The discussions surrounding employee retention in light of the recent Great Resignation call into question several core tenants of the hiring process and those who are involved in it. And while many hiring experts say the worst of the movement took place during the latter part of 2021, the lack of headlines doesn’t necessarily mean we’re out of the woods. In fact, according to Fortune, resignation numbers from May 2022 are virtually the same as they were at the end of 2021.

The COVID-19 pandemic – and several other global and market-based factors – created new lenses through which many employees are viewing their current professional positions and the job openings in their preferred fields.

But what has that meant for those in the banking and financial industries? Let’s go through some of the ways the Great Resignation could be impacting your credit union, and how you can move forward with some helpful employee retention strategies.

The Great Attrition? The Great Renegotiation? The Great Realignment?

The Financial Brand shared some helpful insights about the latest developments in the labor movement. The first thing they noticed is the name – the Great Resignation – keeps getting tweaked in an attempt to accurately convey the current hiring and recruiting climate. But whether news sources are calling it the Great Renegotiation, Realignment, or some other evocative term, there’s really one central theme: businesses have a demand for specific talent, and there aren’t enough willing workers to keep up with that demand.

This dialogue may get tricky, but it’s a necessary step in the right direction for many financial institutions and could bring about substantive change in the future.

Redefining the Workplace for Employee Retention

Remote work was a necessity as little as two years ago, but the farther we get from the worst of the COVID shutdowns, the more banks and credit unions are faced with choosing what they want to define as the workplace. There’s now no way to deny that a great number of tasks can be done remotely and have been. However, many industries still value having employees come into the office or another business-centric work location.

But when about 3 out of every 5 employees across U.S. industries has looked for a job in the past 12 months, it’s a clear sign that your current employees may not think they are being served as well as they are serving their employers right now.

Action Items to Increase Employee Retention

The top survey items that current employees looking at their options are saying they would leave their current job for one that is more flexible, both in hours and in the work location. These desires are followed closely by things like more pay transparency, a greater focus on sustainability, and comprehensive DEI (diversity, equity, and inclusion) strategies.

When you break this list down, it’s really saying two things. First, the work-life balance that exists currently is not desirable or optimal for employees. And second, more and more people are looking for jobs with company cultures that show their commitment to fair, sustainable, and transparent business practices overall.

Employee retention amid the Great Resignation can also be boosted by evaluating your communication channels. Are your managers and leaders truly listening to the concerns of those who report to them? How many employees have brought up similar issues in strategy and engagement improvement meetings? Are your leaders conducting critical research into these issues and providing feedback or alternative solutions?

Employee trust is rising again, and that trend must continue in order to keep your best and brightest employed at your credit union. Your employees are expected to learn new technologies and techniques that will improve workflows and allow your credit union to better serve its members, but you also must look behind you. Are you providing the same experience for your staff? Can they count on you to grow and change as they need?

Competitive Hiring Practices Are a Must

From entry-level to C-Suite hiring, the current market means that your credit union will have fewer interested applicants and less time to make a great offer before your ideal candidate accepts another position. A strong offer right out of the gate shows your candidates that you are serious, and can show that your CU is willing to be direct and transparent about the compensation, benefits, and responsibilities that come with the role.

Digital Solutions Are Leading the Way

Many employees (and members) are looking for credit unions to meet them where they are. Phone conversations can oftentimes be replaced with helpful chatbots, internal and member-facing digital communication and navigation tools, and other digital solutions that cut down immensely on the frustrations your employees experience with their teams and the members they interact with.

It also often cuts down on the time these employees and members are spending on these calls trying to navigate the loan application process or work through strategic issues. Traditions are great when it comes to company culture, but antiquated communication for the sake of “keeping things the same” isn’t going to appeal to the largest portion of those who are joining the workforce today.

Top-Notch CU Technology Is Your Partner in the Employee Retention Game

We hear it all the time – these are the days when everyone wants to work smarter, not harder. And that often means leveraging technology to augment (not replace) your skilled and specialized employees wherever possible.

Private cloud services are helping credit unions all over the country create sustainable and stable options for back-end protocols and processes like data discovery, IaaS, and anomaly detection.

What can IMS help you with today?

Benefits of a Diverse Credit Union Board of Directors

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Diversity is something every business and governing body can benefit from. Diverse groups can offer more creative and innovative solutions, and they consider more perspectives that groups with similar members in terms of age, race, religion, education, and background may not. But what does that mean for your CU? Let’s discuss the benefits of a diverse credit union board of directors.

Your board of directors plays an integral role in creating and managing initiatives that sustain and grow your credit union as a business. Your board is also the place innovation goes to thrive – or die. That’s why diversity is even more important when it comes to creating sustainable innovation within your credit union.

The Role Diversity Plays in Creating an Innovative Board of Directors

Recently, there was an academic article that published findings directly related to the importance of diversity on boards of directors’ effectiveness and its impact on innovation. According to the study, the “systemic understanding of market trends, value chain developments, and consumer or customer needs are some of the factors that contribute” to the success of a business.

In order to maintain that understanding of market trends and change factors, it’s important that you have a wide array of voices and experiences represented on your credit union board of directors.

And in recent years, the board of directors has come to not only help guide the strategy, high-level structure, and leadership appointments in a business. It has also taken on the role of establishing structure and guidance when it comes to company culture, sustainability, and ethics.

Because innovation isn’t just one thing, it’s a hard metric to study. But the academic article we are mentioning here underscores the idea that innovation can only truly thrive as an “attribute of organizations” – a core tenant of your credit union’s business dealings – where there are many different perspectives working together to find the best solutions and growth opportunities.

Benefits of a Diverse Board

Other than driving innovation, there are many benefits to creating a diverse credit union board of directors.

First, it positively affects the community at large. Credit unions are built for serving the communities they operate in. And that means your board needs to be at least as diverse as the communities you’re serving. Every community is different. Certain communities are more blue-collar, urban, Hispanic, or Jewish, for example. Creating a board of directors that is made up of voices and perspectives that can understand the true needs of the community your credit union serves is a great way to ensure certain demographics aren’t completely alienated by the initiatives you are putting in place.

For example, in and around the town of Berne, Indiana, there is a large Amish community. So, if you are trying to reach all of the diverse communities within your region to lower the barriers to entry on your services, offering Spanish is a great start.

But your board of directors should also think about including Pennsylvania Dutch (the language spoken by many Amish communities in Indiana and the USA) as a language or interpretation option on your materials.

Initiatives like this can help create opportunities for your credit union better serve and build trust within certain marginalized groups that are looking for your products and services. And that is a core component of fostering business growth for your credit union.

Focusing on diversity can also open your board of directors up to opportunities regarding non-traditional talent. If your entire board is made up of seasoned financial advisors and other banking-specific professionals, you are likely losing out on great opportunities.

Including board members who are local small business owners, online marketers, or other strategic and operational professionals can help create more well-rounded and well-received initiatives for your credit union.

Ways to Foster Diversity in Your Board of Directors

There are many ways to foster diversity in your credit union board of directors.

One easy way is to include young professionals already involved in your credit union’s work. You will get the dual benefits of having younger voices and perspectives in the discussion, while simultaneously training the next generation of board members on the strategies and insights that are necessary to keep your credit union innovative.

In that same vein, you should be hiring people with diverse backgrounds to join your credit union staff.

You can also tweak the size of your board to be able to reflect more diverse communities. The goal should be to create a board of directors that mimics the diversity of the community you are working in. If the community is 65% white, 12% aged 65+, 38% blue-collar, or 40% Black, your board should reflect that.

Another great way to diversify your board of directors is to evaluate each member’s effectiveness and participation. Increase transparency and publicity surrounding board nominations and elections, too.

For more great resources on fostering diversity within your credit union board of directors, check out the National Credit Union Association’s (NCUA) Diversity and Inclusion page.

Diversify Your CU Board and Leave the Data Management to IMS

Unlike the complexity of creating and maintaining diversity in your credit union board of directors, products, and services, data management should be simple and cost-effective. IMS has successfully deployed solutions with simplicity for end-users while maintaining ease of installation & usage.

DataArchiver saves up to 80% of primary storage costs, and significantly reduces backup times. Our solution is scalable to manage unlimited file servers in a distributed environment with zero disruption to end-users.

Browse these and more offerings here on our website or contact us today!