Equifax Market Pulse: Credit Unions Continue to Grow in Today's Economy

April 20, 2023

FROM TRADITIONAL BANKS TO ONLINE-ONLY INSTITUTIONS, consumers have numerous choices for managing their finances. One that is sometimes overlooked is banking with a credit union. Typically not-for-profit organizations owned by their members, credit unions are often able to offer low interest rates on loans and savings accounts, charge fewer fees and provide personalized customer service, which can save consumers money over time. This can be particularly important in today's economic climate, where every penny counts. 

On the March 2023 Market Pulse webinar, “How Credit Unions Are Adapting to Economic Uncertainty,” panelists Rob Wescott, former Special Assistant to the President for Economic Policy and President of Keybridge, LLC; Tom O’Neill, Risk Advisor, Equifax; and Mike Schenk, Deputy Chief Advocacy Officer for Policy Analysis and Chief Economist, Credit Union National Association (CUNA), discussed how credit unions are successfully growing deposits and championing financial inclusion even amid today’s economic uncertainty.


Deposit growth despite uncertain territory  

Recent Equifax Consumer Credit Trends data shows that credit unions have been increasing their deposits in various areas of the financial market, including mortgages, auto loans and bank cards. While rising interest rates and home prices have led to a decline in mortgage originations, credit unions have been less affected by such macroeconomic factors and have been able to maintain a consistent strategy, resulting in an increase in their share of new originations. Additionally, credit unions have seen continued success in the auto market, thanks to partnerships with dealerships and lower loan interest rates making them more attractive to consumers. “As a result, credit unions now have nearly 36% of the new originations, compared to about 28% from the same period last year,” said Tom O’Neill, Risk Advisor, Equifax.

In the bank card market, credit unions have seen a strong recovery in new card trades following the early pandemic drop in 2020. While the subprime share of those originations remained consistent over time, the credit union share tended to run counter to the overall market trends. “Credit unions are steadily serving their members and are less likely to deviate from that strategy based upon market factors,” said O’Neill. “The credit union share tends to run a bit counter to the overall market, suggesting again that they are prioritizing serving their members and providing what they need when they need it over, adjusting to existing market trends.” These trends demonstrate the advantages of credit unions over commercial banks, including a lower risk profile, historically lower delinquency rates, and a better understanding of their customers. 


The credit union difference when it comes to financial inclusion 

Credit unions also have a clear purpose to engage and support their community, making them attractive to millennials and Gen Z consumers who value member ownership and social responsibility. They often prioritize financial education and community outreach programs to promote financial literacy and help individuals and families achieve financial stability. “But there’s an awareness issue,” said Schenk. “It’s about making sure that young people understand the credit union difference.”

Credit unions have the opportunity to differentiate themselves from traditional financial institutions through more personalized service and emphasis on greater community involvement. According to a recent CUNA survey, credit union members are twice as likely as non-members to believe that credit unions care about the local community. Despite changes in the credit market, credit unions have remained consistent in their approach to serving members, leading to their success in capturing shares of originations in various markets.

For more information on Equifax consumer credit trends and to register for future Market Pulse events, click here