What Comes Next for Your Credit Union?

Picture of diverging paths

What Comes Next for Your Credit Union?

May 12, 2020
  • Strategy

In many ways, the COVID-19 pandemic caught all of us by surprise. Some of us were better prepared as shelter-in-place orders spread across the country, but no one could have anticipated where we’d be right now. 

The good news is that we’ve adapted. For many of us, operations have stabilized, and we’re working hard to manage with the appropriate precautions, day-by-day.  Maybe you’ve even had the time to take a deep breath, a step back, and appreciate what you and your staff have accomplished.

If not, do that before you read on.

Ready? Now is the time to start planning for our post-pandemic environment—whatever that may be. When the curve has flattened, and we begin to understand what we mean when we talk about this “new normal”, we need to be prepared to respond and move ahead boldly, rather than trying to adjust on the fly once again. 

New post-pandemic precautions could be with us until a virus is developed and readily available, which could be 18 months or longer, and it will take the economy months to recover from the result of the damage that’s been done.  With unemployment at near all-time highs, businesses needing to re-start production (and possibly find new sources of revenue), and skepticism that personal incomes will return to pre-pandemic levels, it could be a long and difficult journey for credit unions and our members.

Is your credit union prepared to operate and survive in this new world?  Have you thought about what you can expect in the aftermath of the pandemic? 

Here are five things to consider and start planning for today:

1. An Increase in Delinquency

You’ve been working hard to help your members since the layoffs and furloughs began. Through a mix of deferments, loan modifications, waived fees, lower interest loans, etc. you’ve done what you had to do to relieve a little of their stress and fear.

What happens when these temporary measures aren’t enough?

As much as we hate to default to the worst-case-scenario, there are a lot of factors to consider.

These things (and more) will affect when members can begin to afford to make regular, scheduled loan payments again. 

If history is any indication, economists predict that we’ll experience delinquency rates of 3.5% or more. Smart management of your member’s past due accounts, regular and compassionate communications, and innovative lending solutions will help your members and your team weather this delinquency storm.

How experienced and capable are your collectors to handle the kind of high-contact, high-empathy conversations they’ll need to have to keep delinquencies as low as possible? Do you have the time and talent on your team to prepare for these new collection challenges? Or could you use some expert support and training to get you there?

2. More Member Calls

Personal finances are an emotional trigger for a lot of us, perhaps now more than ever. Because lobbies have been closed or are limiting the number of visitors, members are missing the face-to-face conversations they may need to talk them off the ledge. Instead, they’re calling. Many credit unions are reporting increases in call volume of up to 40%, and these calls will continue.

This drastic increase in calls may be straining your already limited staff. Whether your CU has a dedicated call center, you’re relying on those working the drive-thru lanes, or you have a team answering calls from home, higher call volumes, stressed callers, and more complicated questions may be taking its toll.

Do you have enough staff with the right knowledge to help your members when they need you most? Would extra support and expert training help you answer your member’s important questions and retain your valuable member service staff?

3. New, More Complicated Regs and Reporting

Managing your Human Resources is complex at the best of times, and COVID19 has made it even more so. With the CARES Act, FMLA, and workplace precautions that can vary from city to city, there’s an almost overwhelming number of new rules, regulations, and guidance that you’ll need to navigate. Plus, many of these new requirements call for special reporting and compliance mandates.

What does your team need to implement policies that reflect these new remote work realities?

Do you feel totally confident that you understand your obligations under these new rules, and do you have the capacity to implement them?

If you’ve ever considered the need for more Human Resource power to ensure you can navigate the complex (and litigious) waters of employment law and make sure you can respond to simple benefit and payroll questions, now is the time to act. Get the right people on your team to keep you moving ahead.

4. In-Branch Health and Safety

OSHA, the CDC, and other national and state organizations have been and will continue, issuing guidelines and protocols for re-opening businesses and other spaces that have been closed to foot traffic since mid-March. When we do open, don’t expect to go right back to business-as-usual. The chances are that for much of the country, social distancing, limiting the number of members that can access facilities, and other transmission protection rules will continue for months to come.

Knowing how you’ll handle and communicate the steps your taking to keep your members and staff safety will be key.

It may feel like you have some time before you have to make these critical decisions, but acting now will mean you have the procedures, signage, and, most importantly, staff education in place to make everyone both safe and stress-free as we all ease back into what comes next.

5. Boomers (and beyond) Going Cashless

We admit it. Many of us had long since given up the idea that we’d convince older members to move away from their dependence on the branch and into the online world. We had done our best and made some in-roads, but they still made up the majority of our in-person traffic.

Then, suddenly, the access to all kinds of face-to-face business evaporated, and they’ve been challenged to move online and into other payment options or risk their own health. The transition has been jarring, probably even frustrating, for these members, and without support, they’ll slip back into familiar habits as soon as our lobbies are open again.

How can we help these members, who still represent 1/3 of all consumer spending, long term? Would a concentrated effort that included targeted messaging, traditional promotional materials, and easy to access video tutorials help you equip Boomers and beyond with the tools they need to stay home, stay safe, and not feel cut off?

What’s your next move?

If you’re ready to meet this new future head-on with the team you have in place, start now, because tomorrow won’t wait for you.

If you’re not sure if you have the expertise and experience you need right now, don’t panic, we’re here to help.  We’re a CUSO — Credit Union Service Organization — designed specifically by a credit union for credit unions. With IT, Marketing, HR, and Operations services we’ll work with you to help you be stronger, smarter, and more sophisticated with all your core business functions.

If you think we might be of service, please reach out. Let's discuss ways we can help you continue to grow in these uncertain times.

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About the Author: Alan Bergstrom is a dedicated needle-mover. In everything he does —from his early career as an Air Force officer, to advising Fortune 500 companies, to his most recent position as CEO of Exclamation Services — he makes a meaningful and measurable impact on the performance of people and businesses.