As consumer expectations shift, they no longer want to interrupt their buying experience to search for a loan. Instead, they expect to be offered credit at the precise moment they need it.
Credit unions are also facing mounting pressure from other directions. In addition to evolving consumer expectations, quickly developing technological advancements, and intensifying competition from big tech companies threaten credit unions in 2025.
The landscape is further complicated by market forces and regulatory pressures putting downward pressure on non-sufficient funds (NSF) fees and interchange income, while liquidity challenges dampen loan growth and drive up the cost of funds. It was the crux of a recent TruStage study, which examines the strategic choices of high-performing credit unions reveals valuable insights into how industry leaders are navigating these challenges while maintaining strong growth trajectories.
The Anatomy of Credit Union Leadership
TruStage’s study identified three distinct categories of high performers: loan growth leaders achieving a compound annual growth rates of 12.7% or higher from 2020 to 2023, membership growth leaders with CAGR of 3.3% or higher during the same period and ROA leaders maintaining returns of 92.5 basis points or higher as of Q3 2023.
Each group had unique characteristics and challenges, but they did share one crucial trait: organizational agility and adaptability. These institutions consistently demonstrated superior ability to pivot quickly in response to changing market conditions. The significance of this adaptability cannot be overstated. The ability to quickly respond to market changes, adopt new technologies and meet shifting member needs has become a critical differentiator for financial institutions.
Additionally, there was a strong correlation between digital tech adoption and growth. Both loan and membership growth leaders showed significantly higher adoption rates of advanced digital technologies compared to their peers. For instance, 57% of membership growth leaders had implemented cloud computing solutions, compared to just 38% of lower-performing institutions. Similarly, 53% had deployed APIs for vendor relationships, versus 28% of their counterparts.
The technology adoption patterns reveal a sophisticated approach to digital transformation. Credit union leaders aren’t just implementing technology for its own sake; they’re strategically deploying solutions that enhance operational efficiency and member experience. For example, 49% of membership growth leaders have implemented advanced data analytics for decision-making, compared to just 17% of their lower-performing peers. This suggests a data-driven approach to understanding and meeting member needs.
Community Presence As the Crux to Successful Credit Union Leadership
The story isn’t simply about digital transformation. Both membership growth and ROA leaders also continued to value physical branches as a top distribution channel, with 72% of institutions in both categories ranking branches among their top three distribution channels for 2024. This suggests that leading credit unions are pursuing an omnichannel strategy rather than focusing exclusively on digital or physical presence.
Strong community presence emerged as a crucial differentiator, particularly for membership growth and ROA leaders. These institutions were significantly more likely to cite community engagement as a key competitive advantage. This finding suggests that while digital capabilities are important, local market presence and community relationships remain powerful drivers of sustainable growth.
The most successful credit unions appear to be those that leverage their community connections while simultaneously building robust digital capabilities.
The approach to revenue generation strategies also varied significantly among leaders. Membership growth leaders showed stronger interest in member business loans and home purchase mortgages, while loan growth leaders prioritized member business loans while placing less emphasis on investment income and credit card lending. Meanwhile, ROA leaders demonstrated greater focus on investment management capabilities.
Moving Forward
Success will come not from adopting a single approach, but from carefully selecting and implementing the strategies that best fit your credit union’s unique circumstances, market position and member needs.
Multiple paths to success: The research reveals that high-performing credit unions achieve excellence through distinctly different strategies. While some leaders have focused on expanding commercial relationships and business lending, others have found success through residential mortgages or investment services. The key isn’t in choosing any particular path, but in clearly identifying strategic priorities and aligning resources accordingly.
This diversity of successful approaches suggests that credit unions should focus less on copying competitors and more on developing strategies that align with their unique strengths and market opportunities. The research shows that success comes from making deliberate choices about where to focus resources and attention, then executing consistently on those choices.
Redefining traditional service: High-performing loan growth leaders are actively reshaping conventional service models, showing a marked shift toward efficiency and technology-driven solutions. This transition doesn’t represent an abandonment of personal service, but rather its evolution for a digital age. The most successful credit unions are are using digital to create real-time personalized connections when it matters most to their members.
These changes reflect a broader transformation in how credit unions approach member relationships. Leading institutions are using technology to enhance rather than replace personal interactions, creating more touchpoints and opportunities for meaningful engagement while improving operational efficiency.
Growth strategy and M&A: The competitive landscape is pushing credit unions to look beyond organic growth alone. A notable 18% of membership growth leaders now prioritize M&A capabilities, compared to just 5% of lower performers. This significant gap suggests that strategic partnerships and mergers are becoming increasingly important tools for achieving growth objectives.
The emphasis on M&A represents a recognition that scale matters in today’s financial services environment. Credit unions need sufficient size to invest in technology, maintain competitive service offerings, and achieve operational efficiencies. For many institutions, partnerships or mergers may offer the fastest path to achieving these goals.
Organizational culture and adaptability: The highest performing credit unions demonstrate strong alignment between leadership and employees regarding strategy and execution. These institutions have built cultures that support quick adaptation to change and promote diversity, equity, and inclusion. The research shows a clear connection between inclusive cultures and business success.
Credit unions need to focus particularly on building adaptability into their organizations. This means creating systems that allow quick responses to market changes, developing processes for regular strategy review, and maintaining flexibility in resource allocation. Success in today’s rapidly evolving financial services landscape requires teams that are comfortable with change and able to adjust course as conditions evolve.
Digital transformation imperatives: While technology adoption is crucial, the research shows that successful digital transformation requires a thoughtful, balanced approach. Leading credit unions are investing in digital capabilities while maintaining strong community connections. They’re creating seamless experiences across all member touchpoints, whether digital or physical.
The key is to view digital transformation not as an end in itself, but as a means to enhance member service and operational efficiency. Credit unions should evaluate their technology investments against clear strategic objectives, ensuring that digital initiatives align with overall institutional goals and member needs.
Implementation and execution: Moving forward requires a careful balance between innovation and traditional strengths. The most successful credit unions aren’t those that have abandoned their roots in pursuit of digital transformation, but rather those that have found ways to enhance their traditional strengths with new capabilities. Regular assessment of progress and willingness to adjust course are crucial for long-term success.
Implementation doesn’t need to happen all at once. Credit unions should focus on steady progress toward becoming more agile, technologically advanced organizations while maintaining the community connections and personal service that have always been their strengths. Success comes from making deliberate choices about priorities and executing consistently on those choices over time.
Download the full whitepaper, “What can we learn from the strategic choices of growth leaders?”
The “Making Strategic Choices for Growth” survey was commissioned by TruStage and conducted by Ipsos between February 2 and February 19, 2024. A total of 322 CU executives (CEOs, lending, marketing, finance, IT and HR), representing 322 credit unions with assets of $50M+, completed the survey. Methodology: 322 credit union CEOs, lending, marketing, finance, IT and HR executives participated in this study. The views expressed here are those of the author(s) and do not necessarily represent the views of TruStage. TruStage™ is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates.