What Strategic Choices Are Credit Unions Making to Drive Growth ?
Growth through expansion into new counties/states
An integrated cascade of choices
Before the pandemic (January 2018-February 2020) During the pandemic (March 2020-April 2021) Planning to expand by end of 2022 None of the above
What is our winning aspiration?
Purpose of the enterprise: Our guiding aspirations
$250M-$500M total assets 21% 8% 11% $500M-$1.25B total assets 30% 17% 26%
Right playing field: Where we will compete - our geographies, product categories, consumer segments, channels, vertical stages of production
Where will we play?
Unique right to win: • Our value proposition • Our competitive advantage
Howwill we win?
> $1.25B total assets
What capabilities must be in place?
Set of capabilities required to win:
• Our reinforcing activities • Our specific configuration
SOURCE: CUNA Mutual Group © November 2021 THE FINANCIAL BRAND
What management systems are required?
Support systems: Systems, structures, and measures required to support our choices
planning to do so by 2022. These credit unions could represent the start of the surge in merger activity that our Chief Economist, Steve Rick, is expecting to take place between 2022 and 2024.
SOURCE: Playing to Win: How Strategy Really Works by A.G. Lafley © November 2021 THE FINANCIAL BRAND
capabilities must be in place?". Executives from 183 credit unions with total assets >$250M participated in this research. By matching participants’ survey responses to their credit unions’ NCUA 5300 Call Report Data, we were able to examine how top-performing credit unions’ responses differed from other credit unions. Credit Unions’ “Where Will We Play?” Choices We first asked credit unions whether they've grown through expansion into new counties or states. Figure 2 breaks out credit union executives’ responses by asset category. We see that nearly 2/3 of the smaller credit unions we surveyed, i.e., those with $250M-$500M of total assets, indicated that they had not engaged in any expansion into new counties or states before or during the pandemic (1/2018-4/2021), nor do they plan to do so by the
By Steve Heusuk Senior Manager, Customer Intelligence at CUNAMutual Group
end of 2022. By contrast, less than a third of large credit unions (total assets >$1.25 billion) did not expand into any new counties or states before or during the pandemic, nor do they have any plans to expand by 2022. These results suggest that a common growth strategy of larger credit unions has been to expand into new geographies through either a charter change or mergers/acquisitions. Next, we further explored credit unions’ choices to grow through mergers and acquisitions (M&A). We used NCUA data to understand credit unions’ past M&A activity and the survey to ask about future merger plans. As shown in figure 3, nearly one out of four credit unions in our survey sample had engaged in M&A activity prior to or during the pandemic. Fifteen percent of respondents indicated their credit unions are
To better understand credit unions’ efforts to continue growing in the face of competitive threat from major banks, challenger banks and other fintechs, CUNAMutual Group commissioned a research project to explore the strategic choices of credit unions. This research was heavily based on the book, Playing to Win: How Strategy Really Works , which describes an integrated cascade of choices which companies can use to develop their strategy (figure 1). Per the authors, the responses to these five questions collectively comprise the strategy of a firm. Our research focused on credit unions’ choices related to the middle three questions: "Where will we play?", "How will we win?" and "What
Past merger activity and future plans
Merged before/during the pandemic AND plan to merge again by 2022
Merged pre-pandemic or during pandemic January 2018-April 2021 or 40 months
Plan to merge by 2022 May 2021-December 2022 or 20 months
SOURCE: NCUA 5300 Call Report Data and CUNA Mutual Group © November 2021 THE FINANCIAL BRAND
THE FINANCIAL BRAND INSIGHTS WINTER 2021
THE FINANCIAL BRAND INSIGHTS WINTER 2021
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