Non-Tech Savvy CUs Losing Assets: Magnify Money.
Credit unions that offer fewer digital services are losing assets, according to a new study by financial product comparison site Magnify Money.
Using data from December 2015 NCUA Call Reports to measure credit unions' digital capabilities on a scale of 0 to 100, the study found that credit unions with the highest digital adoption scores (75 to 100) grew their assets in six months by 3.85%, versus just 0.23% for credit unions with scores of 25 to 50. Assets shrank 1.12% for credit unions with scores below 25. Membership also shrank 1.37% for credit unions with scores of 25 to 50 and shrank by 0.24% for credit unions with scores below 25.
"This sends a clear warning to credit unions: If you want to grow and prosper, you will need to invest in digital capabilities," the study said.
The study calculated scores based on whether credit unions digitally offered services including online banking, audio response/phone-based services, ATMs, kiosks, mobile banking, member applications, new loans, account balance inquiry, share draft orders, new share accounts, loan payments, views of account history, share account transfers, bill payment, downloads of account history, electronic cash, account aggregation, electronic signature authentication/certification, e-statements, external account transfers, merchant processing services, remote deposit capture and mobile payments, as well as whether they had a website. It weighted each offering equally, it said.
Digital adoption varied widely among credit unions, the study found, but large credit unions (those with more than $2 billion in assets) were the most advanced. Their digital adoption scores averaged 83, compared to 81 for credit unions in the $1 to $2 billion range, 78 for credit unions between $500 million and $1 billion, and 75 for credit unions with assets between $250 million and $500 million.
The average digital adoption score was just 42 for credit unions with less than $250 million in assets.
Five credit unions scored at least 96, ranking them highest in the study for digital adoption: The West Covina, Calif.-based United Catholics Credit Union, which has $32 million in assets and 3,700 members (score: 100); the Tampa, Fla.-based Suncoast Credit Union, which has $7.3 billion in assets and 698,000 members (score: 100); the Tukwila, Wash.-based Boeing Employees Credit Union, which has $15 billion in assets and 956,000 members (score: 100); the Palo Alto, Calif.-based Stanford Credit Union, which has $2 billion in assets and 56,000 members (score: 96); and the Portsmouth, N.H.- based Service Credit Union, which has $2.9 billion in assets and 229,000 members (score: 96).
Some digital services are very common today among credit unions in the study: Seventy-six percent offered online banking, 50% offered mobile banking, 68% offered e-statements and 62% offered online bill pay.
However, just 35% had digital membership applications, 24% offered new share accounts digitally and only 27% offered remote deposit capture. Only 18% offered mobile payments, the study said.
Also, 18% of credit unions in the study did not have websites.
"This study shows that the large credit unions are investing in digital technology, growing their user base and creating best-in-class experiences for their consumers," the study said. "However, there is a real risk for the smallest credit unions. They will need to find cost-effective ways to embrace digital technology, or face risks."