2008 will be the year where credit unions will be tested for their flexibility. Competition is fierce out there, add to that mixture the fact that we have lower fee income and interchange revenue, sub prime meltdown, downward pressure on the stock market, housing construction is the worst in 16 years and a possible recession around the corner.
How does this impact your credit card portfolio? The Federal Reserve recently reported that borrowers are relying more heavily on credit card debt to finance purchases - which means that sooner or later delinquencies will rise.
To avoid the inevitable, here are some high level points to remember:
- You have to be efficient to remain profitable - efficient in the way you do business, efficient in the way you evaluate opportunities and efficient in the way you manage expenses.
- Depend more on technology to identify cost saving solutions to communicate and transact with your members.
- Marketing campaigns should focus on debt reduction and the overall credit union benefits.
- Vendor management and cost reduction becomes a key to your strategic success.
- Hiring the right people to develop and nurture member relations becomes critical.
I can probably think of many more - but the idea is that we need to be smarter at what we do to help the member, and ultimately, to help ourselves.
1 comment so far
1 Andy // Jan 23, 2008 at 12:50 pm
Great post!
Efficiency is key these days. People want things, and they want it fast. Look at McDonalds, their food is awful (imo), but people eat there because its the best place to get a 30 second meal on the run. Utilizing new technology and the web is going to be key in keeping efficiency up.
Also great point about gearing marketing toward debt reduction. People are wallowing in debt, and lots of people just don’t know how to get out of it. If credit unions can be a viable option for escaping credit card debt it will be a huge differentiator for credit unions.
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