Credit Unions Offer a Growing Client Market for Smaller ARM Firms

When most people hear the term “financial services”, they typically think of big traditional banks – e.g., JPMorgan, Capital One, and Citi. However, credit unions – non-profit institutions that focus on serving their members rather than generating a profit – have become an increasingly prominent segment that offers attractive opportunities for both borrowers and debt collectors alike. In particular, small-to-mid-size accounts receivable management (ARM) companies should find credit unions appealing due to the regional, fragmented nature of the sector and rising overall charge-off levels.

To better understand the scope of opportunities available, Kaulkin Ginsberg compiled a report regarding the credit unions sector from the perspective of the ARM industry. Specifically, the report explores market-level revenue and charge-off trends segmented by asset class, as well individual, quantitative analyses of sector leaders that cover data such as income and net charge-offs. These case studies are particularly aimed at supplying ARM executives and their sales teams with actionable data on potential clients.

The credit unions sector as a whole has grown precipitously in recent years. Since 2013, total sector revenue rose at an average annual rate of about 8% to $64 billion in 2018. Unlike commercial banking, the credit unions market is quite diffuse, with the top seven players accounting for just 14% of the market. Instead of a few large firms running the show, there are thousands of community-focused credit unions spread around the country that present smaller or regional collection agencies with the opportunity to enter the financial services sector without having to compete against some of the largest ARM companies.

At the same time, total sector net-charge offs grew precipitously, reaching nearly $6 billion in 2018. Since hitting a post-recession trough in 2014, net charge-offs have risen at a rate of over 14%, on average, per year. While the total amount of net charge-offs is smaller than what can be found in the commercial banking sector, the strong growth trend exhibited in the past few years should encourage ARM companies that currently service (or wish to begin servicing) credit unions.

As stated earlier, Kaulkin Ginsberg also examined some of the largest credit unions in the sector – including Navy Federal, State Employees’, and Pentagon Federal – to determine revenue and charge-off trends. On the whole, bad debt and net charge-off levels are rising for the top players, with some charging-off more debt than they did during the Great Recession. Kaulkin Ginsberg’s market research team compiled these detailed case studies to help ARM firms identify and target new potential clients.

The ARM industry – in particular, its smaller players – should certainly be optimistic about the continued growth of the credit unions sector. Although it’s not nearly as large as the rest of the financial services sector, credit unions are still growing steadily, without the potential high risks associated with commercial banking institutions.

To purchase the full report, or inquire about additional market sectors – including cable & telecommunications, commercial banks, Federal Government, healthcare, property management, student loans, and utilities, please reach out to Kaulkin Ginsberg’s market research team at hq@kaulkin.com.

Close Menu