The NAFCU Journal March-April 2020 - 28

What's on the Horizon

Filene Research Institute's head of
research, Taylor Nelms, Ph.D., and his
former colleague at the University of California-Irvine, Stephen Rea, Ph.D., provide
credit unions with an amazing resource
in The Credit Union of the Twenty-First
Century (filene.org/459). I like to joke with
this duo that we are already in the 21st
century, but their task was to examine
how credit unions can continue to thrive
well past the 100th anniversary of the
Federal Credit Union Act in 2034.
As we approach 2034, the role of credit
unions in providing secure, fair access to
financial services - particularly for individuals of small and moderate means -
remains as important as ever. While
many of the socioeconomic factors that
drove the credit union system in the
last century remain salient, more recent
changes - especially technological innovations that have fundamentally changed
how financial institutions interact with
consumers - encourage us to reimagine the role that credit unions will play
in the United States' financial services
landscape over the next decades.
Through a series of in-depth interviews
with industry professionals, consultants

and regulators, and an extensive examination of more than 100 secondary sources,
the researchers imagine a not-too-distant
operating and regulatory future for credit
unions. The research paints a future credit
union landscape that is both enabled by
technology and altered by changing economic conditions and consumer attitudes.
Some of the most important socioeconomic transformations include:
■	 growing income volatility and financial fragility;
■	 growing income and wealth inequality;
■	 credit union growth and consolidation;
■	 generational divisions, leading to
what the researchers call the "two tails"
problem of concentrated need among
the young and elderly; and
■	 an increase in the proportion of
precarious workers and the rise of a
"1099" workforce.
For consumer preferences and expectations, some of the key drivers of
changes include:
■	 a shift away from traditional branching delivery channels;
■	 significant advances in, and consumer
adoption of, sophisticated voice and
video capabilities;
■	 consumers' changing relationships
with automobiles;

Reduced ABILITY TO SAVE
60% of households experience
at least ONE FINANCIAL
SHOCK PER YEAR

Wages for the BOTTOM 50% OF
EARNERS HAVE REMAINED FLAT
in the last 40 years
1 in 5 U.S. households have ZERO
OR NEGATIVE NET WORTH

radical enhancements in data analytics
and automation; and
■	 the emergent role of payments
as the key entry point into financial relationships.
■	

Changes in Consumer
Interactions

These trends result in a potentially new
- and radically different - operating
and regulatory model for credit unions
in this century. From an operational
perspective, credit unions need to adopt
impactful technologies that are already
changing the consumer's relationship
with their financial services provider.
The authors recommend credit unions
prepare for this future by developing and
deepening four models for the provision
of consumer financial services.
Relationship banking. This is differentiated by credit unions' deep knowledge
of and responsiveness to the needs of
members and their communities. As
one interviewee put it, "This is something deeper than a deposit. This
is something way, way more than a
transaction. This is about being a part
of your community, and giving back,
and helping the community not only
survive, but even thrive."

20% of all workers
today are CONTRACTORS
50% of contractors have
NO BENEFITS

RISING
INCOME
VOLATILITY

UNEMPLOYMENT AND DEBT burdens
hit millennials the hardest
By 2035, Americans aged 65+ will
outnumber those under 18 with LITTLE
TO NO RETIREMENT PLANNING

28

CREDIT UNION MEMBERSHIP HAS GROWN to
almost one-third of the total U.S. population
ECONOMIES OF SCALE and REGULATORY BURDENS
have been motivators for system consolidation

THE NAFCU JOURNAL  MARCH-APRIL 2020


https://www.filene.org/459

The NAFCU Journal March-April 2020

Table of Contents for the Digital Edition of The NAFCU Journal March-April 2020

The NAFCU Journal March-April 2020 - Cover1
The NAFCU Journal March-April 2020 - Cover2
The NAFCU Journal March-April 2020 - 1
The NAFCU Journal March-April 2020 - 2
The NAFCU Journal March-April 2020 - 3
The NAFCU Journal March-April 2020 - 4
The NAFCU Journal March-April 2020 - 5
The NAFCU Journal March-April 2020 - 6
The NAFCU Journal March-April 2020 - 7
The NAFCU Journal March-April 2020 - 8
The NAFCU Journal March-April 2020 - 9
The NAFCU Journal March-April 2020 - 10
The NAFCU Journal March-April 2020 - 11
The NAFCU Journal March-April 2020 - 12
The NAFCU Journal March-April 2020 - 13
The NAFCU Journal March-April 2020 - 14
The NAFCU Journal March-April 2020 - 15
The NAFCU Journal March-April 2020 - 16
The NAFCU Journal March-April 2020 - 17
The NAFCU Journal March-April 2020 - 18
The NAFCU Journal March-April 2020 - 19
The NAFCU Journal March-April 2020 - 20
The NAFCU Journal March-April 2020 - 21
The NAFCU Journal March-April 2020 - 22
The NAFCU Journal March-April 2020 - 23
The NAFCU Journal March-April 2020 - 24
The NAFCU Journal March-April 2020 - 25
The NAFCU Journal March-April 2020 - 26
The NAFCU Journal March-April 2020 - 27
The NAFCU Journal March-April 2020 - 28
The NAFCU Journal March-April 2020 - 29
The NAFCU Journal March-April 2020 - 30
The NAFCU Journal March-April 2020 - 31
The NAFCU Journal March-April 2020 - 32
The NAFCU Journal March-April 2020 - 33
The NAFCU Journal March-April 2020 - 34
The NAFCU Journal March-April 2020 - 35
The NAFCU Journal March-April 2020 - 36
The NAFCU Journal March-April 2020 - 37
The NAFCU Journal March-April 2020 - 38
The NAFCU Journal March-April 2020 - 39
The NAFCU Journal March-April 2020 - 40
The NAFCU Journal March-April 2020 - Cover3
The NAFCU Journal March-April 2020 - Cover4
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