There are just over 5,200 credit unions in the United States, as of 2021. And more than 65% of those are classified as “small credit unions.” According to the NCUA, these are credit unions that have less than $100 million in assets.
In much the same way that any small business will have vastly different challenges than corporations, conglomerates, and other big business operations, there are also unique challenges for small credit unions. Let’s talk about some of the biggest challenges and share some ideas and opportunities small credit unions can take advantage of in the near future.
Challenge #1: Growing Your Member Base
Many small credit unions are struggling to grow their member base in recent years. This is due to several factors, including the COVID-19 pandemic, increasing technology and innovation, inflation, supply chain issues, rising costs, and the rise of digital banking.
Credit unions often serve a small or specific demographic, industry, or geographic area, and that makes it hard to increase membership. But there are many ways to incorporate growth-focused solutions into your credit union’s current programs.
The first thing you can do is differentiate. We are seeing member satisfaction drop and consumer complaints increase. Larger businesses and big banks all have the same problem – there’s no human element, and they often lack that personal touch that small credit unions are known for.
You can differentiate by updating your credit union’s brand imaging, colors, or even the name of your credit union. You can also leverage community outreach, sponsorships, and member experience. Authenticity and true connections to your members will be more powerful than a catchy slogan and empty promises. Your members and prospects want real, high-quality experiences with the brands they endorse, from the clothes they wear to their subscriptions, healthcare providers, and financial institutions.
Marketing is also another powerful tool you can leverage as you work to grow your member base. Because yours is a financial institution that works to integrate itself into the communities it serves, you can often highlight real members and real problems your communities are facing. Offer discounts and complimentary services for members who are willing to share their experience with your credit union on their social pages. Create video, caption, photo, and other contests and have your members create your marketing content for you – they’ll have the chance to be highlighted (and win or earn the contest prizes) in exchange for their true and relatable stories about how your credit union helped them realize their entrepreneurial dreams, or how your community outreach efforts made for a positive holiday experience for families in the area.
Marketing can no longer be a sporadic or piecemeal effort for small credit unions. You have all the promotional power that big banks do, and you can scale the costs to work with your budget while making real progress in capturing market share.
Challenge 2: Market Share
A third way to grow that member base and capture market share is to lean into the community you have and take a chance on some of the small businesses that have been turned down by other big banks and credit unions. Small credit unions can often offer solopreneurs and side hustlers small loans and financial assistance that can help them meet their goals and grow their businesses.
If a member just barely misses being able to qualify for one of your loans, sit down with them and try to get a clearer picture of what their financial situation looks like. There are opportunities here, and having a more personal approach not only increases your loan numbers, it also creates a valuable relationship and often means the member will work even harder to ensure they can fulfill their loan requirements. Positive reinforcement is a great way to build brand image and reputation, as well.
Challenge 3: Innovation & Technology
Another big hurdle for many small credit unions is the ability to innovate and implement the latest technology. This is one of the top challenges for small credit unions because often, to get these new technology offerings, you have to pay a premium. However, as social media marketing and app development have become easy to create based on existing templates or freelance work, the playing field on this front has been all but leveled.
Now it’s up to your credit union to stay on top of the latest innovations in banking, fintech, and the like to ensure that you are offering your members the latest and greatest in financial management and digital tools.
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