Now’s The Time To Deploy Capital For Long-Term Member Value

Years of balance sheet discipline have presented credit unions with capital to invest. The question now is where it can create the most value.

This is part of the Callahan Financial Performance Series. Presented by the analysts at Callahan & Associates, the series helps leaders interpret data to drive smarter decisions and uncover new approaches to measure performance.

In the past few years, credit unions have navigated tight liquidity, shifting deposit demand, interest rate volatility, and economic uncertainty while protecting their capital positions. Now, improving margins are giving them more room to invest in long-term member engagement and retention.

Operational capability, however, doesn’t mean the path forward is clear or easy. There are myriad ways credit unions can deploy capital to better serve members and communities.

Flexibility By Asset Class Capital and earnings flexibility exists broadly across credit unions of all sizes, although it takes different forms. Credit unions with less than $250 million in assets wrapped up the second quarter with an impressive average net worth ratio of 13.30% despite a comparatively modest 0.65% ROA. At the opposite end, credit unions with more than $10 billion in assets reported a net worth ratio of 11.07% but an ROA of 1.09%.

Smaller institutions entered the third quarter with a larger relative capital cushion to direct toward product and operation investments, whereas larger institutions had stronger profitability cushions to cover increased spending on the income statement.

Smaller credit unions tend to be well-capitalized but have smaller ROAs; their larger peers have smaller net worth ratios but a stronger earnings position. Member Investment Investing surplus capital with an eye toward building long-term member engagement, attracting younger members, and strengthening members’ financial wellbeing strengthens credit unions’ long-term relevance.

High prices are squeezing household budgets, but many consumers are unable to access credit. In 2025, one-third of loan applicants were denied or approved for less than they requested, a bit higher than historical norms. With today’s reserve cushion, many credit unions have the ability to retain responsible underwriting while still supporting traditionally underserved community members via affordable credit, competitive rates, and financial support.

For more than five years, a second-chance auto loan program at Wright-Patt Credit Union ($9.5B, Beavercreek, OH) has helped credit- and income-challenged members buy a car, even when they don’t qualify via traditional underwriting. A new approach to mortgage lending at 7 17 Credit Union ($2.2B, Warren, OH) favors no fees, low rates, and refinance incentives. And a high-yield account at Skyla Credit Union ($1.7B, Charlotte, NC) lowers barriers to savings, rewards progress, and builds healthy habits.

Banking Preferences Of course, how credit unions deliver such support matters, too, and U.S. households increasingly expect the ability to access financial services quickly and conveniently.

U.S. households tend to favor mobile apps to access financial services; online banking places a distant second. A 2025 survey conducted for the American Bankers Association found 54% of consumers most often manage their accounts through a mobile app, with another 22% primarily banking online. Just 9% cited branches as their primary channel, although that still represents more than 30 million people who either can’t or won’t bank online and might feel marginalized by today’s preferences. Yet even among baby boomers, mobile apps surpass online banking as the most common way to manage an account.

People want to complete routine transactions wherever they are, but branches still play an important role in financial services. Account holders visit branches for complicated issues and value having a branch nearby for stability and accessibility. University Federal Credit Union ($4.3B, Austin, TX) is marrying easy access with valued service while breaking down barriers for underserved communities. Its fully equipped mobile branch provides essential banking services, financial education, and trusted support right where people need it.

As digital channels become the preferred way to manage money, credit unions face pressure to deliver experiences that are easy to use and meet member needs. New technologies require investment to adopt and tailor to those needs, but it’s also important to understand whether and how members actually benefit from those services.

The Role Of AI According to the 2026 Financial Services Benchmark Report from Smart Communications, when it comes to AI, consumers care less about the technology and more about outcomes. Nearly have of respondents, a full 48%, said they support the use of AI if it delivers faster response times. Although the question specifically addressed AI, the responses offer a broader lesson about what consumers value: interactions that are faster, easier, more relevant, and ultimately more useful.

Consumers are most receptive to AI when it delivers clear, practical improvements to service, cost, or security. As member expectations rise, so does the baseline cost of providing a competitive financial experience. Digital platforms, cybersecurity, fraud prevention, faster lending decisions, knowledgeable employees, and the infrastructure connecting it all requires targeted investment, either through internal development or vendor partnership, often both).

Structure, oversight, and clear expectations help ensure AI supports long-term strategy at Members Cooperative Credit Union ($1.2B, Duluth, MN), whereas a technical review committee helps Robins Financial Credit Union ($5.0B, Warner Robins, GA) evaluate vendors, manage risk, and determine where AI fits into its long-term technology strategy. A dedicated innovation team and internal testing framework help MSUFCU ($8.7B, East Lansing, MI) move promising ideas from pilot programs to proven product.

Investing in new technology carries inherent risk, but so, too, does standing still as competitors evolve. Credit unions’ current capital position offers flexibility to carefully experiment with new tech.

How are credit unions approaching fintech investment? Future Bets on CreditUnions.com explores how leaders balance immediate needs with longer-term bets, evaluate potential partners, and define success alongside mission and member value. Read the series today .

Delivering On Expectations As in often the case in business, scale makes investment easier.

In the second quarter, efficiency ratios ranged from 81.7% among credit unions with less than $250 million in assets to just 60.4% among those with more than $10 billion. The gap has persisted throughout the past five years, reflecting an important advantage of size: large institutions can spread many of the same technology, staffing, compliance, and infrastructure costs across substantially more members and revenue.

Scale allows larger credit unions to spread the rising cost of serving members across a broader operating base. This reality does not make investment any less necessary for smaller credit unions, it just makes the math a little harder. Still, many smaller institutions also have substantial capital cushions they can put to work. Scale makes new capabilities easier to absorb, but investing does not always mean bearing the full cost alone. The challenge is finding ways to improve the member experience without allowing the cost of delivery to overwhelm the value created.

This is where the cooperative model holds an advantage. CUSOs, shared branching networks, venture funds, and strategic partnerships all help smaller credit unions access capabilities that might otherwise be out of reach.

Credit unions do not have to approach every investment in isolation. The movement has long found ways to share resources, extend capabilities, and create efficiencies that would be harder for individual institutions to achieve alone. When those investments make managing finances a little easier, service a little faster, or financial support a little more accessible, the impact compounds across millions of member relationships.

Credit unions have spent years building capital. Now they have an opportunity to put it to work. Whether through lending, technology, financial education, branch access, or new partnerships, the end goal is to deploy resources in ways that deepen engagement, improve members’ financial lives, and reinforce the value of the cooperative model for years to come.

Now’s The Time To Deploy Capital For Long-Term Member Value

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