Tipping Scale: Credit Union Consolidation

by Bart Narter,  Stephen Greer, July 14, 2011
Industry Trends
North America

Abstract

The past 10 years have seen significant concentration in the credit union landscape, with credit unions of more than $500 million in assets rapidly gaining deposit share and growing in number, while smaller players are being forced out of the competition. Is this trend healthy for the credit union market? Can credit unions between $10 million and $50 million in assets survive, and what will their role be?

In a new report, Tipping Scale: Credit Union Consolidation, Celent looks at trends in credit unions by asset category and explores the underlying issues causing the decline of credit unions. The report specifically takes into account efficiency ratios, deposits, and total count.

Credit unions with less than US$2 million in assets are quickly disappearing, while those with $2 million to $10 million are not far behind. Looking at the entire credit union spectrum, the number of credit unions in the US is declining rapidly, from 10,316 at the end of 2000 to 7,339 at the end of 2010.

“In the past, credit unions simply required a branch or two, a core banking system, and an ATM,” says Bart Narter, Senior Vice President of Celent’s Banking Group and author of the report. “In the past 10 years, Internet banking, bill pay, know your customer, and Office of Foreign Assets Control (OFAC) compliance are table stakes. Going forward, competition will be driven by demand for mobile banking, consumer and business remote deposit capture, and branch capture.”

This report first examines overall credit union count within each tier, then looks at the efficiency ratios, and finally examines the trajectory of shares and deposits for each category over the last 10 years.

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

3

Credit Union Count: A Closer Look

5

 

Efficiency Ratios

6

Shares and Deposits at Credit Unions

13

Conclusions

20

Leveraging Celent’s Expertise

21

 

Support for Financial Institutions

21

 

Support for Vendors

21

Related Celent Research

22

Sign in to download reports and access personalized information