Catch CU: The Ongoing Evolution of the Credit Union Market

by Stephen Greer, November 11, 2014
Industry Trends
North America

Abstract

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.”

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Executive Summary

1

Institution Count and Shares at US Credit Unions

3

 

Efficiency Ratios

11

Thoughts for the Future

14

Leveraging Celent’s Expertise

15

 

Support for Financial Institutions

15

 

Support for Vendors

15

Related Celent Research

16

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