The Federal Credit Union March-April 2014 - (Page 6)

INSIDE NAFCU Nimble Credit Unions Adjust Quickly to Industry Changes M any enterprises succeed and fail based on their ability to manage changing dynamics, both within their own walls and from outside forces. Sometimes the external factors that impact business are beyond the control of the business owner, and one must forge ahead with the circumstances that have been handed down. In the "Special Topic" survey in the January issue of the NAFCU Economic & CU Monitor, the news was both positive and challenging, and respondents demonstrated that they are focused on the changes in the financial services industry and how those influence their day-to-day business. "Credit unions continue to adjust to economic factors and technological changes in the financial industry," said Doug Christman, research assistant at NAFCU. "They also are making changes due to the regulatory burdens that have been popping up, and credit unions look like they're moving pretty quickly to comply." One positive sign from the survey is that 11.4 percent of respondents plan to increase member business lending programs. Christman said this is a continuation of a scenario created by the poor economy over the past five years. While banks tightened the credit strings, credit unions were more willing to lend to small businesses and continue to expect gains in that area. Another plus is that slightly more than one-fifth of respondents anticipate increasing their credit union service organization (CUSO) investments this year, and more than 15 percent are considering additional sharedbranching opportunities. 6 Because of many of the regulations brought about by the Dodd-Frank Act in 2010, 20.6 percent of respondents are considering searching for a partner with whom they can merge. "Part of the regulatory burden is the cost of complying with those regulations," Christman explained. "For smaller credit unions, this burden drives a higher proportion of costs, so if you merge with a larger credit union, your costs are spread out." Another 38.2 percent of respondents are looking to add a select employee group to their field of membership. Membership growth can help fend off some of the added regulatory costs. According to Christman, however, some credit unions are limited in how they can increase their membership. The third significant item in the survey, Christman says, is that more than one-third (36.7 percent) of respondents would offer Interest on Lawyers Trust Accounts (IOLTA) if they were federally insured. Some other points highlighted in the Monitor: 71 percent of respondents confirmed that their vendor costs have increased because of Dodd-Frank. ■■ 43.8 percent have contracted with new vendors because of increasing regulations. ■■ 6.7 percent have concerns that their vendors will not meet compliance deadlines in 2014. ■■ 3.1 percent are looking to outsource their mortgage programs. ■■ 6.3 percent are considering outsourcing other loan or credit card operations. ■■ Combining this report with positive news out of the December Monitor that signaled continued membership growth as well as growth in new-vehicle sales, it appears the credit union industry is adapting to the changing environment and succeeding in identifying areas to continue to grow. THE FEDERAL CREDIT UNION MARCH-APRIL 2014

Table of Contents for the Digital Edition of The Federal Credit Union March-April 2014

Voices & Opinions
From the Chair
Inside NAFCU
Succession Success
100 Ways to Grow
Marketing Winners
Getting to Know...
Managment Insight
Compliance Central
Inside NAFCU Services
From the President's Desk

The Federal Credit Union March-April 2014