The crisis of the past few years has taken a financial toll as high prices and borrowing costs put businesses and consumers under pressure.
Credit unions have been dealt a particularly tough hand, given their focus on communities that often suffer more during tough times.
"In the past year, our credit union faced the challenge of supporting members during economic uncertainty, especially in low-income communities," said Darlene Johnson, executive vice president and chief strategy and transformation officer at Suncoast Credit Union. "Rising costs placed additional financial strain on our members, many of whom were already vulnerable."
Johnson is one of this year's Most Powerful Women in Credit Unions honorees. The 15 women on the list 2024 are some of the most innovative and resilient leaders in the industry.
"High inflation has increased operating costs, both for ICCU and our members, with rapidly rising interest rates," said Brenda Worrell, president and CEO of Idaho Central Credit Union, which has shifted product development and lending strategy to improve lending and replacing lost income.
Worrell, Johnson and some of the other honorees discuss how their institutions are managing their businesses while helping their consumers.
The cost of living crisis has made finding and paying for housing a particularly difficult challenge. Johnson cites data from the National Low Income Housing Initiative that says there continues to be a substantial gap between families' incomes and rental housing costs. Federal rental assistance only reaches about 1 in 4 likely eligible households, leaving millions unable to afford housing while meeting basic needs such as food, clothing, and transportation, she said.
Suncoast last year expanded affordable housing programs and enhanced access to low-cost loans that fund medical care and transportation.
By deploying advanced data analytics, Suncoast has attempted to proactively locate consumers that require financial help.
"These strategic adjustments helped our members navigate economic challenges while ensuring our organization remained financially strong," Johnson said.
While inflation has cooled, it's still hard for consumers to pay for routine items like groceries, gas and housing. That has also made it more difficult to borrow and make card payments according to Inna Sprague, CEO of Teachers Federal Credit Union.
The credit union did a brand refresh and website redesign, making dealing with economic stress a part of the strategy. Customer-facing staff were instructed on how to have conversations on the subject and what services can be offered to consumers that are having difficulties with debt or liquidity.
"As a member-owned institution, our foremost responsibility is to safeguard the financial well-being of our members," Sprague said. "Over the past year, this meant making sure we are appropriately responding to a rapidly shifting economic landscape and making sure our teammates are prepared to respond to our members' changing needs."
Economic challenges also drive strategy at Valley First Credit Union in Modesto, California, where the credit union's members usually pay their bills almost immediately after receiving their salary.
"Our members truly live paycheck to paycheck. We also know that our community has limited lending choices offering favorable pricing, so not lending was not an option for us," said Kathryn Keopf Davis, president and CEO of Valley First, which asked wealthier members to make more deposits as a way to improve the credit union's ability to lend during a period of low liquidity for
"Given the work we do throughout the Central Valley, we had a good reputation and good relationships with nonprofit organizations," Keopf Davis said. "We determined they would be a good target market to acquire deposits from.
The lack of access to the banking and financial services market can contribute to consumer financial stress, creating a need for credit unions and their traditional mission of reaching underserved markets. Nearly 20% of Americans across a broad cross-section of races and incomes are unbanked or underbanked, according to the Congressional Joint Economic Committee. And among Americans with bank accounts, 20% report having an unmanageable debt, up 25% from 2020.
"Given these facts, we suggest the industry consider how we have approached our communities," said Beverly Anderson, CEO and president of BECU.
For those who are brand new to the financial system or may be currently experiencing financial difficulties, the responsibility of the credit union as a cooperative is to help educate and guide consumers to the appropriate path, Anderson said. BECU makes in-person and digital financial health checks available to address needs.
"For those who are navigating through economic stresses or unexpected challenges, we look for ways to meet our members where they are and help them to reach financial stability," Anderson said. "And for those who find themselves overextended financially, we look for ways to deploy appropriate solutions to address both immediate and longer-term scenarios."
