Demographics, Financial Trends Creating Challenges and Opportunities for Credit Unions

« Alarms should be sounding in credit unions across the nation, » says Vicki Joyal, VP-Research Services for the Credit Union National Assn. (CUNA). « You are clearly facing both challenges and opportunities. »

Joyal was the keynote speaker Monday for the 2005 Floyd Forum Leadership Conference at the Barton Creek Resort & Spa in Austin. Her topic, « The Evolving Credit Union Environment, » may have seemed more like a revolution to some of the CU executives. She took them on a « whirlwind tour » of demographic and financial trends, from debit card use and online banking to fraud threats and bankruptcy reform.

« The average age of adult CU members has increased from 40 to 47 during the past two decades, » she noted. « (He/she) has now left his prime borrowing years (25 to 44). In 2003, nearly 36 million people age 65 and over lived in the United States, just over 12 percent of the total population. The Baby Boomers (born between 1946 and 1964) start turning 65 in 2011. The older population in 2030 is projected to be twice as large as in 2000, growing from 35 million to 71.5 million, nearly 20 percent of the total population.

« Do we have the right mix of products and services? » Joyal bluntly asked. « Do we have the right facilities? Convenience may take a whole other form. Are employees trained to meet the needs of seniors? » She also noted the growing need to accommodate older workplace employees.

« There are four generations in some workplaces. They care for children and parents. Flexibility will be key, » since many want to phase into retirement, to have eldercare, long-term care and health insurance. « Only 8 percent of credit unions now have retiree health insurance. »

Joyal, based in Madison, Wis., is the primary analyst for, and publisher of CUNA’s annual Credit Union Environmental Scan (E-Scan), the leading strategic planning resource for the credit union movement. The 2005 report is due out in June, followed by a 150-slide PowerPoint version in July and a video version in August. Many credit unions use the summer to do their program and services planning sessions.

On the opportunities side, the CUNA analyst emphasized the rapid growth of the Hispanic/Latino market, poised to grow by 75% in the next 25 years.

By 2050, the Asian population will more than double to 9% of the U.S. population. But « by 2025, there will be as many Hispanic/Latino Americans as seniors (age 65+). If you are looking for new, young members, look to Hispanic/Latinos.

This ‘unbanked’ segment definitely needs financial services. They are taking money home and putting it under their mattresses! » she said.

Source: John M. Floyd & Associates, Inc.

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