Catch CU: The Ongoing Evolution of the Credit Union Market
The past 15 years saw a significant concentration in the credit union landscape, with credit unions of more than $500 million in assets gaining deposit share and growing in number at the expense of smaller players. Credit unions with less than $50 million in assets are quickly disappearing, while those with $50–100 million are in a precarious position.
Across the spectrum, the number of credit unions in the US is declining rapidly, from 10,316 at the end of 2000 to 6,491 in 2014. This represents a compound annual growth rate (CAGR) of –3.25%. Credit unions with more than $500 million are vastly outgrowing any other category. Credit unions with less than $50 million in assets are disappearing, but the industry may adjust to the new role that smaller institutions could play in the future. What that role looks like will depend on the credit union.
In the report Catch CU: The Ongoing Evolution of the Credit Union Market, Celent looks at the trends affecting consolidation of credit unions in the US. The report begins by tracking the trends within six asset tiers. Then Celent examines the growth of deposits, followed by efficiency ratios. The report concludes with insight and recommendations for banks going forward.
Credit unions will be pressed to find a market niche, which may vary by location and mission statement, but competing on the value proposition of larger competitors is not viable.
“The industry is evolving, and as it evolves the minimum viable size of an institution must change,” says Stephen Greer, Analyst with Celent’s Banking Group and author of the report. “The demands of modern financial services are too great to ignore.”