The Credit Union Industry’s Growth in the Past Decade

Written by Carly Simon-Gersuk

You have a lot of options when it comes to choosing a financial institution to keep your money. We find that the majority of people choose between a bank or credit union. With similar services, banks and credit unions business models create various differences but both outrank other banking alternatives.

While banks had predominantly come to mind first, that is changing as credit unions assets have grown within the past decade. Robert Clark, a writer for S&P Global, reports that within the past decade balance-sheet growth at US credit unions was significantly higher than at banks. “Total assets at credit unions cross the $1 trillion level in 2012, ending the decade at $1.585 trillion.” (1) The 10-year growth rate for credit unions between 2009 and 2019 was 76.7%; it outpaced banks' increase of 42.4%. Furthermore, the growth difference in the past decade between banks and credit unions was more pronounced in loans and leases. Credit unions had compiled over double that of banks at a 93.0% growth rate, with banks rate at 44.5% (1).

On an international level, membership rates grew exponentially too. The World Council of Credit Unions, Inc. reported in October 2020 that the global credit union membership grew 59% in the past decade (2). This increase of more than 107 million members takes memberships to over 291 million in 118 countries. “Our movement continues to grow because we respond to the needs of members by expanding services, providing more access through digital channels and putting their economic empowerment ahead of corporate profits,” said World Council President and CEO Brian Branch.

Credit unions growth will continue to increase as the industry meets the demands for convenience and safety as it integrates into the digital economy. With the advances in online banking and mobile applications, credit union members have access to their accounts to complete financial transactions and check their balances. This easier access to financial services is a reason why members stay with their financial institutions.

Additionally, credit union growth will continue as they beat banks with lower average rates for credit lines, personal loans, auto loans and more. The Wall Street Journal reported that credit unions now make up approximately a third of the U.S. auto loans (3). In the past decade, credit unions' auto loans have risen from 23% to 32%. With lower interest rates, this boost in credit union auto loans continues to grow as more individuals apply for new, used and auto refinancing.

Regardless of the growth strategies credit unions may use, building strong member relationships will remain the main focus and at the core of the industry. With their ability to have more personalized service than at a bank, credit unions will continue to grow as they strive for service, not for profit.

 

Written by Carly Simon-Gersuk

 

Sources

1.spglobal.com,
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/a-decade-of-rapid-growth-at-us-credit-unions-57227484
2.woccu.org,
https://www.woccu.org/newsroom/releases/Global_Credit_Union_Membership_Grew_59_in_2010s_to_Surpass_291_Million
3.wsj.com,
https://www.wsj.com/articles/how-credit-unions-outgrew-their-down-home-reputation-11575282600