BY PATRICIA TRIPAR
If you thought the credit union landscape was already competitive, it’s about to get worse. Recently approved NCUA regulations are necessitating CUs to develop new ways to increase their member base and enhance revenue. Discover how to grow your membership by heightening customer experience – all without breaking the new rules.
The National Credit Union Administration (NCUA) recently approved regulations that will prohibit credit unions from creating organizations such as charities for the purpose of acquiring customers not otherwise eligible for membership.The new rule will go into effect shortly and states that any charity created by a credit union must have a separate and distinct function that is removed from just increasing a credit union’s membership.
According to one major credit union CEO, what’s now become habit – credit unions creating entities solely for the purpose of qualifying individuals for membership – violates the intent of the statute that limits credit unions from serving defined fields of membership.And advertising that “anyone can join” can and always has been inviting trouble.
When it comes to NCUA’s new regulations, existing members, regardless of how they came into the credit union, are grandfathered in – providing some relief from the Administration’s new regulations.Nevertheless, credit unions now need to focus on customer acquisition within the context of their membership guidelines and mission, not via charities or entities created to enhance membership.Thus, the credit union landscape has become ever more competitive as firms need to develop new ways to increase their member base and enhance revenue.Real interest rates are near zero.Net interest yields are razor thin. And because of the mission-based operating model of many credit unions, most are handicapped in their ability to enhance revenue via increased fees. So the time is now for credit unions to increase membership – the right way.