Analyst Provides Insight on Industry Tech Adoption
By Roy Urrico
Financial research firm Raddon, a Fiserv company, announced 21 U.S. credit unions — segmented by above and below $1 billion — as the winners of its 2022 Crystal Performance Awards, which recognized them based on key performance metrics including service, member relationships and sales.
“The Crystal Performance Awards are a measure of individual credit union success, and also give a holistic perspective of the entire industry,” said Bill Handel, general manager and chief economist at Raddon. “We see that even in the face of recovery from the pandemic and a whole new slate of challenges on the horizon, credit unions continue to adapt and embrace innovative ways of delivering financial services. Their commitment to delivering outstanding performance on behalf of their members is impressive, and recognizing their success is positive for Raddon and our industry.”
Since 1983, the Lombard, Ill.-based Raddon has provided innovative research, analysis and strategic guidance to financial institutions. “But we've really specialized in the credit union industry since the early 1990s,” Handel told Finopotamus. “Since 2009, we kicked off the Crystal Performance Awards, designed to be a measurement of the performance of an organization based upon a number of different factors much broader and deeper than the traditional simple financial metrics that a lot of organizations use. The reason we are able to do that is because of the analytics that we do around organizations.”
Handel explained that for each Crystal Performance Award, Raddon considers 10 different factors revolving around areas such as growth, relationships, margin management, efficiency, and non-interest income management.
The Crystal Performance Award Winners Circle
Raddon emphasized by benchmarking performance against peers, credit union leaders can understand competitive advantages, and develop more effective strategies and approaches to member service.
2022 Crystal Performance Award winners, more than $1 billion in assets:
· Capital Credit Union, Green Bay, Wis. ($2.3 billion)
· Community First Credit Union, Appleton, Wis. ($5.2 billion)
· Idaho Central Credit Union, Chubbuck, Idaho ($8.9 billion)
· Logix Federal Credit Union, Valencia, Calif. ($9 billion)
· Navy Army Community Credit Union, Corpus Christi, Texas ($4.2 billion)
· New England Federal Credit Union, Williston, Vt. ($2 billion)
· Numerica Credit Union, Spokane Valley, Wash. ($3.6 billion)
· Randolph-Brooks Federal Credit Union, Live Oak, Texas ($15.5 billion)
· Spokane Teachers Credit Union (STCU), Liberty Lake, Wash. ($5.3 billion)
· Three Rivers Federal Credit Union, Fort Wayne, Ind. ($2.1 billion)
2022 Crystal Performance Award winners, under $1 billion in assets:
· Capital Credit Union, Bismarck, N.D. ($707 million)
· Extra Credit Union, Warren, Mich. ($323 million)
· First Source Federal Credit Union, New Hartford, N.Y. ($853 million)
· Hoosier Hills Credit Union, Bedford, Ind. ($839 million)
· Marshall Community Credit Union, Marshall, Mich. ($313 million)
· Mid Oregon Federal Credit Union, Bend, Ore. ($663 million)
· North Star Community Credit Union, Maddock, N.D. ($412 million)
· Sacramento Credit Union, Sacramento, Calif. ($715 million)
· Utah First Federal Credit Union, Salt Lake City, Utah ($737 million)
· Vermont Federal Credit Union, Burlington, Vt. ($886 million)
· Westerly Community Credit Union, Westerly, R.I. ($429 million)
“This honor recognizes only the highest overall performers in the areas of service, member relations, sales and financial soundness,” said Tom Neumann, CEO of First Source Federal Credit Union, regarding the credit union’s first Crystal Performance Award. “It is validating to have our organizational culture, including the team’s focus on providing the best value to our members, earn us a spot among the top credit unions in the country.”
Two other credit unions, Community First Credit Union and Logix Federal Credit Union, both received the award for the 14th consecutive year.
“We strive to help our members achieve their goals while maintaining financial wellness. Our partnership with Raddon has been key in our ability to deliver on that promise to our members,” said Catherine Tierney, CEO of Community First Credit Union. “The award is icing on the cake for us.”
Ana Fonseca, CEO of Logix Federal Credit Union said, “The (Raddon) Performance Analytics program enables us to constantly improve our performance and gives us objectives that are concrete, measurable and results oriented. Our members are the true beneficiaries of our Raddon partnership.”
Large or Small Credit Union Adopt Innovation Differently
Handel explained to Finopotamus why Raddon distinguishes winners above and below $1 billion. “We think it is really important to differentiate between the larger organizations (that) have an advantage in terms of being able to perform well in some areas.” He noted the Raddon’s defined score, is based upon metrics such as per household and membership share, efficiency ratio, and margin management. “A lot of different things are combined together to create one overall score.”
The Raddon general manager and chief economist then alluded to a trend that preceded COVID-19. “That is as a larger organization, it is just is a little bit easier to get high performance. And that is simply because there is such significant economy of scaling in the industry.” Handel explained with that advantage large organizations can better support or afford the technology and marketing demands. “There's a marketing economy of scale (too), which is becoming more and more significant.”
Raddon has noticed that while it is harder for small organizations to get there, “small organizations without a doubt do get there,” said Handel. Raddon has observed for many smaller credit unions, guidance of the financial institution has made the difference. “This notion of leadership, it is not something you can measure in the data per se. What we find is a different level of leadership that happens in these organizations that are open to change. They are organizations that really measure themselves on a very consistent basis.”
Size Does Not Equal Inflexibility
Handel suggested successful smaller credit unions demonstrate a rationality and strong organizational culture in driving toward their objectives, especially for those who consistently win the Crystal Performance Award. “The culture really works both ways. It is bottom-up as well as top-down in these organizations.”
Handel added what bodes well for the future success of these smaller credit unions is the flexibility and adaptability of these organizations. “The ability to look and say ‘what's different now and how do I evolve and respond?’ That notion of innovation, way beyond just technology, is going to be really important for organizations longer term.”
The under $1 billion in assets credit union category also shows an inclination to do things technologically to improve themselves. “Without doubt, there is a commitment to being current from a technology perspective, to understand how critical the technology is, especially with the changing of the guard from a generational standpoint,” said Handel.
“The larger credit unions were much quicker to adapt and try to be current on the innovation side. Smaller ones really relied more on just the established relationship they had built over the years with their membership,” Handel pointed out. “Now we're finding even those really well and strong performing small organizations are the ones really focusing on how technology has to be an integral part of how they deliver to the membership, especially to be effective with younger members.”
Existential Threat to The Industry
Handel voiced concern about an existential threat to credit unions and community banks: the loss of millennial and Gen Z accountholders.
According to a recent Raddon Research Insights (RRI) study, seven in 10 millennial and Gen Z consumers say they use one of the six largest banks as their primary financial institution. One reason given is unlike the big banks, community banks and credit unions have been slower to innovate. “So those organizations that are going to be successful long term are the ones that are going to really have to focus on how they communicate effectively with those younger demographics,” Handel held.
Handel added one caveat. “The interesting thing, this is not just a technology play, because we actually find the younger demographic post-pandemic is visiting the branches more. They are just doing different things at the branch.”
“They are not going in there to conduct transactions,” Handel continued. “They are going there to talk with the credit union about their needs, to solve problems and try to make the right decisions financially. So, it is a combination of taking what (credit unions) have always done well, which is to support the member and help them, but combined with being current from a technology standpoint.”