Demographics, Financial Trends Creating Challenges and Opportunities for Credit Unions - CUNA Analyst

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Vickie Joyal, the top research analyst at the Credit Union National Assn., tells CU executives attending the 2005 Floyd Forum Leadership Conference that rapidly changing demographics, debit card usage, online banking, fraud threats and checking overdraft programs are creating both challenges and opportunities for the nation's 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., (Photo: 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.

Although non-Hispanic whites are still the group most likely to own their homes, “Home buying among immigrants will fuel increases in home ownership rates,” she suggested. “Offer a first-time homebuyers program or affordable mortgage program. They lack closing costs and down payments,” which can be covered by many federal programs, “but they can make the monthly payments.

“You will develop very loyal members, and default rates are not any higher...some say lower,” she added.

“And while 72 percent of the population age 18 to 29 would prefer to start their own business rather than work for someone else, 76 percent of the nonwhite population feel that way, compared to 57 percent of the overall population. CUs should consider offering small business services.”

Debit Cards, Free Checking, Overdraft Fees

CUNA studies show that debit cards are rapidly emerging as the payment instrument of choice. According to a PULSE EFT survey, 54% of consumers prefer using a debit card at the point-of-sale over other types of payments. (Check, 13%; Cash, 15%; Debit card, no preference, 14%; Debit card with signature, 17%; Debit with PIN, 23%.) For credit unions that means opportunity.

“Banks are slowly eroding the competitive advantage” that credit unions traditionally had with free checking, Joyal reported. “CUNA's new Credit Union Fees Survey indicates 57 percent of banks now offer free checking. At 71 percent, credit unions still have the edge, but...while 'imitation is the sincerest form of flattery,’ CUs must strive to set the bar at ever-higher levels….”

On the subject of overdraft privilege (bounce protection or courtesy pay) fees, she said the “great news” is that the average fee charged by credit unions is $22.23 per overdraft item, compared to $27.28 per item by all banks. Currently, 48% of all CUs offer overdraft programs versus 50% of the nation’s community banks.

“The time for online banking is now,” she admonished the attendees, “even though the majority of users are only looking at balances and to see the checking activity and to monitor for fraud. CUs that offer banking online has risen from 15 percent in 2000 to 45 percent in 2004. By 2007, there will be as many bill payments made over the Internet (by online adult Americans with bank accounts) as by check: 29 percent...up from 13 percent in 2004.

“Unfortunately, credit unions are stuck between those members who want online banking and the personal touch. We need to be good at both. You will probably want to offer it free of charge. Members are probably not willing to pay for this,” she advised.

“Phishin’” & Fraud

She warned against the chilling effects of database break-ins and “phishin’” scams by thieves attempting to obtain account information by e-mail and spam. “They are causing members to worry and to blame their financial institutions. Have someone in place who can deal with those consumer fears, even if you have no involvement.

“This is a critical issue, given the rising importance of this online channel in the retail financial services delivery mix,” she said. “One of the greatest liabilities is the potential loss of member confidence.”

Research reveals 18% of those surveyed are less likely to sign up for online banking because of the “growing menace”; 32% are somewhat less likely to sign up and 50% not at all less likely.

Joyal's original research and analysis on credit union service offerings and delivery channels, fees and product features, staff benefits and more have been widely published. She also was the leading researcher for CUNA’s comprehensive Renewal and Renaissance Commission initiatives and was instrumental in providing research and impact assessments to support the passage of H.R. 1151, the “CU Membership Access Act.”

The Forum (, sponsored by John M. Floyd & Associates (JMFA) of Baytown, Texas, has two sessions this week at the Barton Creek Resort & Spa in Austin: Credit union executives, May 1-3; banking executives, May 4-6. The 33-year-old financial services consulting firm is known nationwide for its creation and implementation of overdraft privilege programs.

“The purpose of our conference is to help financial executives focus on the events shaping their industries,” said John M. Floyd. “By design, we are helping our clients and partners recognize the broad expanse of potential productivity and profitability, regulatory requirements and best practices.”

For more Information or Interviews:

Steve Swanston


John M. Floyd & Associates

Baytown, TX


Preston F. Kirk


Kirk Public Relations

Austin TX



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