As our thoughts turn to the end of the year holidays, we can’t but help to think of the beginning of 2020. Undoubtedly, your Credit Union has been churning away at budgets and financial forecasts for next year. The 800-pound gorilla in the room is the predicted recession. Economists cannot seem to agree on whether a recession will occur in 2020, but your Credit Union’s financial forecasts have probably factored in some degree of economic downturn.
At the end of 2019, credit unions saw slower growth in loans and membership. According to CUNA Mutual Group, loan balances rose 0.7% in September, down from the 0.8% in balances reported in September 2018. CUNA Mutual Group forecasts a further slowdown in 2020 due the economy growing at a slower pace, projected at a rate of 1% to 1.5%, which is substantially slower than the 2.3% in 2019. CUNA Mutual Group also predicts further rate cuts by the Federal Reserve, which will put an additional strain on margins. The pressure from those margins will come from the fixed-rate portfolio of auto loans and mortgages that credit unions booked from 2016-2019.
At the end of 2019, credit unions saw slower growth in loans and membership. According to CUNA Mutual Group, loan balances rose 0.7% in September, down from the 0.8% in balances reported in September 2018. CUNA Mutual Group forecasts a further slowdown in 2020 due the economy growing at a slower pace, projected at a rate of 1% to 1.5%, which is substantially slower than the 2.3% in 2019. CUNA Mutual Group also predicts further rate cuts by the Federal Reserve, which will put an additional strain on margins. The pressure from those margins will come from the fixed-rate portfolio of auto loans and mortgages that credit unions booked from 2016-2019.
In addition, the generations that are now becoming borrowers (millenials) will require loan application functionality through the digital channel. Digital lending will be the primary application channel for this group, and any institution either not offering or with a cumbersome digital loan application process will be at a “serious” disadvantage.
