Plan for the best. Prepare for the worst.
Building a bridge from the present crisis to the post-pandemic future.
For decades, America’s economy has been built on consumer spending. Historically, credit powered much of that spending. In fact, it’s fair to say that if none of that credit existed, Americans would live vastly different lives. COVID-19 shutdowns have pulled the rug out from under this traditional behavior. Many have lost their jobs or substantial parts of their incomes, and with that, their ability to make payments on borrowings.
According to J.D. Power, two out of five Americans have seen their income drop by 25% or more. Just 52% of us still pay all of our bills on time. A solid third of the country believes an even worse impact on their finances from COVID-19 is coming.
Lenders and financial marketers face a steep and potentially treacherous challenge trying to figure out what the immediate future is for the types of credit they sell. Given the highly unusual nature of the COVID-19 economic slowdown, prior patterns only tell us so much and can even be misleading future indicators.
What lies ahead, then? Credit unions will need to reassess the potential for growth going forward. It is against this backdrop that your credit union must rethink the way you deliver services, the products you offer, your relationship with members and your role in the community.
For decades, credit unions have been guided by their omniscient and omnipotent Strategic Plan. But is your current Strategic Plan even relevant in this current environment? COVID has tested every aspect of the traditional banking model: employees working from home, branch closures, challenged back office operating systems, mobile banking capacity, etc. And it didn’t happen over a period of years. It happened literally overnight.
To quote Jim Marous, publisher of the Digital Banking Report and co-publisher of The Financial Brand, "Traditional strategic plans have always been an iteration of previous strategic plans. This is unacceptable. We need to blow up previous plans because the old rules no longer apply. The consumer has changed, the competition has changed, and the technology to impact transactions and engagement has changed. Today’s strategic plans need to be built with the ability to pivot immediately when marketplace dynamics change.”
Sounds like a daunting challenge, especially when boards, often with their share of intransigent, old-school members, are involved. But your credit union can find its way forward—and victoriously—although fundamental change will likely be involved.
Take a cold, hard, objective look at how your credit union has navigated this pandemic. And, learn from this assessment. Because COVID-19 is not going to be the last pandemic we experience, that is for sure.
Reconsider your mission statement. Does it still reflect trending values, motivations and purpose? Ask the tough question: If your institution disappeared tomorrow through merger or failure, would anyone care?
Plan for this turbulence, and worse to come, to last for many more months and for it to affect all of your stakeholders.
Then revisit your Strategic Plan and, well, just build it smarter. Build it more realistically. Build it with more flexibility. Build it to address what the future is likely to be, versus what the leadership team would like the future to be. It can become an instrumental and integral road map once again.
In our next issue, we’ll address how your credit union can grow—and grow victoriously—in a rabidly competitive landscape.