Millennials Central to Credit Union Growth, TransUnion Research Finds
New TransUnion (NYSE:TRU) research has found that credit unions continue to grow at a faster rate than other financial institutions, and millennials are both a key driver and target market for sustained loan growth.
TransUnion found that in the first quarter of 2016, credit union membership grew at more than three times the rate of credit activity among consumers across other lender types, such as regional banks or finance companies. Credit unions experienced a year-over-year growth rate of 6.35% at the beginning of 2016, while industry credit active consumers grew at 1.86% in Q1 2016.
According to TransUnion data, 25% of credit union members in Q1 2016 were millennials. In Q1 2013, millennials made up only 20% of credit union membership. Millennial growth for non-credit unions grew at a slower pace, up to 25% in Q1 2016 from 23% in the first quarter of 2013. This is indicative of credit unions’ strategic focus on millennial growth.
“Millennials are an important set of borrowers for credit union growth. Credit unions are actively building their millennial membership, and in fact have experienced growth in this segment every quarter since 2010. Millennials are likely candidates for new mortgages and other credit products as they age, offering credit unions a way to further their market share.”
The research findings were coupled with a survey of 96 credit union executives, which gathered insights on key industry issues. The information was released today at TransUnion’s annual credit union seminar in Las Vegas, which includes participants from leading credit unions across the country.
The survey found that 42% of credit union executives reported an overall year-over-year member growth rate higher than 5%. In particular, credit union memberships via mortgage origination have increased in recent years. In Q1 2016, credit unions had 3.8 million mortgage members, an increase of 4% from 3.67 million in Q1 2015. Compared to five years ago, credit union mortgage memberships have grown 13% from 3.29 million in the first quarter of 2011.
“The data show that credit union membership rates are growing much faster than the overall credit-active population,” said Verma. “Credit union executives are strategically focused on gaining membership growth through mortgage originations, as well as offering products such as credit cards to their existing member base.”
Credit Unions’ Opportunities: Auto Loans and Credit Cards
The survey also revealed that auto loans rank at the top for credit union executives in terms of loan growth, focus and opportunity over the next 12 months. This emphasis is a continuing one: according to TransUnion data, credit unions grew their auto membership 9.8% year-over-year from Q1 2015 to Q1 2016. In addition, in 2010 only 49 credit unions issued more than 10,000 auto loans. In 2015, 126 credit unions were issuing more than 10,000 auto loans.
Top Areas of Growth/Focus/Opportunity for Credit Union Executives in the Next 12 Months
% Ranked #1 in 2016 Survey (2015 Percentages)
% Ranked Top 3 in 2016 Survey (2015 Percentages)
Share Draft Accounts
Credit cards were in the top three areas of opportunity, but only 6% of credit union executives ranked credit cards as their top priority for 2016. The survey found that 69% of credit union executives said more than half of their members do not have a credit card with their credit union. This finding was corroborated with TransUnion research, which found that in Q4 2015, 44% of credit union members did not have a credit card with a credit union, but did have credit cards in their wallets.
“Our data show that 18 million credit union members do not have a credit union card in their wallet, which presents a sizable opportunity for growth,” said Verma. “Credit union executives have an opportunity to cross-sell products to these members who may have a mortgage, auto loan or other product with their credit union already. Most importantly, 75% of these members have a prime or better credit risk score, which means credit performance would most likely remain strong.”
For more information about how to gauge trends and make better-informed decisions, visit http://www.transunion.com/prama. The PramaSM Market Insights module provides detailed, depersonalized information on multiple types of credit at a state, regional and national level, and can be segmented by banks, credit unions, finance companies and other organizations.
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