What are the primary issues that credit union CEOs are keeping a close eye on as 2025 unfolds?

John Holt, CEO of $690 million-asset Nutmeg State Financial Credit Union in Rocky Hill, Connecticut, said heightened regulatory and compliance pressure is chief among them.

Holt said increased focus on data security, along with greater scrutiny of fees and other sources of noninterest income, will place additional pressure on credit unions this year.

“The disproportionate regulatory burden imposed by the CFPB on credit unions, compared to larger financial institutions, may force these institutions to raise loan rates to cover the added costs of compliance,” Holt said.

Other potential impacts could include making credit less accessible for those who need it most and forcing smaller credit unions to look for merger partners.

Nutmeg State Financial and First Bristol Federal Credit Union in Hartford completed their merger in June.

In fact, Holt said Nutmeg state is currently working on two other potential mergers.

He also said that liquidity pressure for credit unions bears watching.

Economic trends – whether positive or negative – are likely to impact credit unions in 2025. In the event of a recession, consumers may struggle to make loan payments while unemployed, putting pressure on credit unions’ liquidity, Holt said.

Conversely, if the stock market continues to grow into 2025, consumers may withdraw funds from financial institutions to invest, particularly if the Federal Reserve continues to lower

interest rates, which primarily affect savings yields.

“The industry has already experienced significant outflows in recent years, following a period of large inflows during the pandemic when government programs provided consumers with excess cash,” he said.

Finally, the increased demand for digital solutions will force credit unions to invest in personalized, AI-driven tools for financial planning, fraud detection, and customer service.

As members increasingly expect seamless, mobile-first experiences, credit unions must offer enhanced money movement, online loan applications, financial education resources, and account management features to provide more options to manage finances with improved security.

“These advancements will provide faster, more convenient access to financial products and services, while maintaining the personalized experience and support that members value,” Holt said.

Nutmeg State Financial earned $1.3 million in the first three quarters of 2024, a 40% increase compared with a year earlier, according to call report data from the National Credit Union Administration.

“The disproportionate regulatory burden imposed by the CFPB on credit unions, compared to larger financial institutions, may force these institutions to raise loan rates to cover the added costs of compliance.”

 – John Holt
CEO
Nutmeg State Financial Credit Union