Technology’s Impact on Credit Union Growth

Technology’s Impact on Credit Union Growth

The financial landscape for credit unions is shifting dramatically, largely driven by technology’s pivotal role. Recent data reveals a growing divide between large and small credit unions in their ability to attract new members. This article examines the trends, challenges, and strategies shaping this new dynamic in the credit union industry.

The Growing Divide: Big vs. Small Credit Unions

Membership Growth Trends

According to the National Credit Union Administration (NCUA), the credit union industry saw a 4.4% increase in membership over the past year, reaching 134.3 million members. Notably, this growth was predominantly among credit unions with assets exceeding $1 billion, which experienced an 8.1% membership increase. In stark contrast, smaller credit unions, particularly those with assets between $100 million and $500 million, witnessed a 4.3% decline in membership.

Leading Examples

Prominent credit unions like Navy Federal and Pentagon Federal (PenFed) exemplify this trend. Navy Federal’s membership surged by 11% to 12.1 million, while PenFed saw a 16% increase, reaching 2.8 million members.

Analyzing the Disparity

Technological Advantage

Technology is a key differentiator. Larger credit unions are investing in technologies that streamline processes like account openings and loan originations, offering frictionless member experiences. This technological edge, coupled with robust marketing and fintech partnerships, places them at a significant advantage over smaller counterparts.

The Merger Trend

To compete, smaller credit unions are considering mergers, seeking economies of scale that enable investment in strategic capabilities.

The Small Credit Union Perspective

The Small Credit Union’s Challenge

With stagnant membership and limited resources, they face a dilemma akin to that of small retailers competing with big-box stores and e-commerce giants.

At this level, the importance of community involvement, exceptional service, and competitive offerings cannot be overstated. It is vital to create a realistic vision aligned with member needs and community identity.

The Indirect Lending Myth

While some credit unions think it may be an effective technique, data clearly debunks the claims of effectiveness of indirect auto lending as a growth strategy. Instead, the data shows similar growth rates across credit unions regardless of their level of involvement in indirect lending.

Success Stories

Sharonview Federal Credit Union

Despite the challenges, success stories like Sharonview Federal Credit Union in South Carolina do exist, which achieved significant membership increase and stands at over $1.7 billion in assets, show that growth is possible with the right strategies.


The credit union industry is at a crossroads, with technology playing a crucial role in determining growth trajectories. While larger credit unions leverage technological advancements to attract new members, smaller ones must innovate and adapt to remain competitive.

This dichotomy highlights the need for a balanced approach that combines technological innovation with traditional values of community service and member-focused operations. As the industry evolves, the ability to harmonize these elements will be key to sustainable growth and success.