How unusual is credit union’s 20.3% share growth in 2020? Or the slight uptick to 23.2% for the 12 months ending March 31, 2021?
For the decade ending in 2020, the credit union system’s compound annual share growth (CAGR) was 6.7%.
Share growth drives the balance sheet. The two sources for shares are expanding existing member relationships and adding new members. The rate of new member gain in this same decade was 3.4% (CAGR). This suggests a balance of internal and external growth sources.
In 2020 however, new members grew at 3.3% or just 16% of the total gain in shares that year.
The 2020 results remind one of the marketing adage about finding more business: there is always more business to be gained from existing customers than from acquiring new ones.
In plain speaking, if existing members aren’t growing their relationship, why will new ones find your offerings attractive?
Data Source: Callahan’s 2020 Credit Union Directory (pgs. 1-2)
Truer words never spoken Chip. As a strategic planning exercise i have often asked CUs what would their plan look like if they made the assumption that they would add no new members in the next planning cycle. How would they be successful if all they did was build and expand relationships with their current members? After many a guffaw, most found that they could easily survive and prosper under that scenario and without the overhead costs of account acquisition, which most didn’t even have an idea of what that was.
The 2020 Summary of Deposits Survey showed deposit growth of 21.7 percent between June 2019 and June 2020, the largest one-year increase. The deposit growth at credit unions is the same deposit growth at FDIC insured banks. With dividends at or near 0.0% credit unions are a safe harbor for excess cash. Maybe they will soon impose a “storage” fee or impose a negative dividend rate.