Kalamazoo-based Consumers Credit Union surpassed a key milestone when it hit $1 billion in assets back in May 2018. By the end of the third quarter, the 92,000-member credit union had grown assets further to $1.07 billion, and President and CEO Kit Snyder expects assets to close the year at $1.1 billion. The growth during 2018 came as Consumers Credit Union settled into a new headquarters in The Groves Engineering Business Technology Park in Kalamazoo.
What are the top issues for Consumers Credit Union and for your industry in 2019?
Changing consumer expectations, especially as Millennials and Gen Z members expect friction-free banking. It is a challenge for all retailers. People want to bank and do business with retailers anytime and anywhere; they don’t want to be forced to come to an office or in some cases even make a phone call. Members of credit unions and customers of banks don’t want to deal with the ‘pain points’ of teller lines, transfer delays, waiting or hold periods for their funds. They also want real-time, instant, peer-to-peer payments. Most financial institutions don’t have seamless software for members and customers to open their initial account online, including checking and debit cards.
What does surpassing the $1 billion mark in 2018 mean for you going into next year?
Bigger is better. This success is about economies of scale. Our workforce has not increased in 18 months, yet we have grown 23 percent and expect to continue at that rate in the year ahead. This is because we’re working smarter, more efficiently and utilizing more and more technology. And we need to continue to be intentional about our work culture as we continue to grow. A positive culture isn’t something that is created overnight. It must be worked on every day. Transparent communication is the key to success.
How does Consumers Credit Union maintain that momentum in 2019?
We’ll continue to grow our market penetration in Grand Rapids, where we just opened our fifth office in Breton Village (in November). We’ll open another office on 54th Street. We have a parcel we’ve prepared and it’s ready. We’ll break ground later in 2019. We’ll continue to grow in our existing markets, but Grand Rapids will have our biggest percentage growth. We started in Kalamazoo in 1951 and our household penetration is over 20 percent in this market. Grand Rapids is a significantly larger market and our penetration there is quite small. It’s just the best opportunity.
How will digital investments be part of the growth plan?
We’ll continue to invest in new technologies and partner with those who will help us with our digital banking expansion with an emphasis on research and nimble innovation. In fact, we have partnered with Lumin Digital and will deliver next-generation mobile banking in the fall of 2019. Our ‘fail fast’ mentality helps us in this. Our online account opening means no office is necessary for everyone to become a member in the Lower Peninsula of Michigan.
Credit unions must invest in new technologies and not be afraid to partner with startups. New technologies arrive every day, and credit unions that continue to update and innovate with the focus on ease and friction-free banking will win.
What do you see the economy doing next year and how might that affect your business?
We’ll continue to see upward interest rate pressure. Fed rate hikes will likely slow the economy. This could lead to possible negative effects on 401(k)s and lending, but consumer outlook will stay high. We estimate car sales will remain high and homes sales will stay as good as inventory allows, but refinancing will be down. All that said, we expect double-digit growth in all our lines of business, including SBA loans, and loan demand will continue to outgrow deposits. Our net income will be somewhat higher because of interest rate increases and improved operational efficiency.
Do you see the regulatory environment changing in 2019 for credit unions?
Yes, with new leadership at the state level — governor, banking regulators and commissioners — there will likely be changes that only time will tell.
What worries you?
With an increased demand for fast technology and instant responsiveness, fraud and cyber security are always top of mind. Credit unions’ loan-to-(deposit) share ratio is at its highest level since May of 1980. That good news comes with a caveat: Economists noted loan-to-savings ratios peak right before recessions.
Interview conducted and condensed by Mark Sanchez.