Why your credit union can’t afford to ignore scenario planning

The importance of scenario planning for credit unions

Credit unions operate in a complex ecosystem influenced by economic, regulatory, technological, and member factors. This tasks your organization to achieve a unique balancing act: adapting to the modern, innovative business world, while still providing a supportive, community-oriented member journey.

The decisions you make today can have a significant impact down the line. By integrating scenario planning into your strategic process, you can remain confident in the face of uncertainty, address risks, and make the most of new opportunities.

A scenario planning exercise allows you to outline multiple possible outcomes for your credit union to consider when making decisions.

Scenario planning in action

For your credit union to effectively scenario plan, follow this six-step approach:

Identify trends and insights

The first step is identifying the most important trends for your credit union. Your board of directors and executive will outline trends that impact the credit union directly, as well as those that impact the marketplace, like human resources insights, technology, changing demographics, and shifts in member behaviours. These trends may have a short- or long-term impact on the future of your business.

In action:

Here’s a list of a few trends that may impact your credit union, as well as the marketplace:

• The current rate of immigration
• The integration of generative artificial intelligence (AI)
• Continued high inflation and interest rates
• Asset liability management
• Disruptions, like a pandemic or data breach

Once these have been identified by the board of directors and the executive team as important, you can move on to the next step. For this article, we’ll be using generative AI to demonstrate effective scenario planning.

Outline metrics and track progress

Determine how you will measure the impact of these trends, and then develop a dashboard to quickly track progress. The business landscape is constantly shifting, and a dashboard can help your credit union respond swiftly to fluctuating factors and adjust your course of action if needed.

In action:

Your board and executive have outlined generative AI as an important trend. To effectively measure the impact and progress of this trend, you need to identify specific metrics to be tracked and measured. Additionally, you need to define what this data means to your organization.

Creating a dashboard will let you regularly monitor these trends so you can rapidly respond to any new technological factors that emerge over time. Perhaps a hiccup in AI will have people turning away from digital solutions. Or maybe a new AI platform will have your members behaving much differently. Either way, your credit union will be able to respond quickly with metrics at your fingertips.

Define the impact by trend

Some trends will have a positive influence on your credit union, while others will have a negative effect. To best examine these impacts, it's important to have a broad perspective. Encourage your entire management team to participate in these discussions and consider a third-party advisor to provide a non-biased perspective.

In action:

You lead a team meeting to discuss the list of trends and insights that matter to your organization. One by one, your team identifies the influence these trends could have on your credit union. Prolonged high inflation, for instance, could have a negative impact on the business. AI, on the other hand, may have a positive influence.

Develop a series of scenarios

You’ve identified the trends, developed a way to measure impact, and engaged in meaningful discussions with your team. Now, you build the potential outcomes that align with your credit union. Think short-term and long-term, developing two to four likely scenarios.

In action:

Using the trend of immigration, your team would build a series of potential futures that could reflect scenes that include new ways to attract members, and/or developing products for new Canadians. These future scenarios would be detailed, realistic, and outline all possibilities — opportunities, risks, and neutral outcomes.

Consider the implications

Put these potential futures to work and consider the possible impacts on all aspects of your credit union. This will help you to identify any changes you need to execute on to ensure each scenario has the outcome you desire.

In action:

Your team would review the scenarios developed and think about the possible touchpoints within your credit union. In the case of generative AI, the scenario would touch several aspects of the organization, including member journey, marketing and sales, research and development, business operations, risk management, and member service.

These scenarios can help chart the course for the future, so your business can confidently move forward when facing new and unknown territories.

Continue to build on your next steps

Scenario planning can be the game-changer for your credit union in today’s modern business landscape. Preparation is key in this evolving world. Not only in mitigating risk, but also in unlocking new opportunities for growth.

Create your strategies

These scenarios can help chart the course for the future, so your business can confidently move forward when facing new and unknown territories.

Continue to build on your next steps

Scenario planning can be the game-changer for your credit union in today’s modern business landscape. Preparation is key in this evolving world. Not only in mitigating risk, but also in unlocking new opportunities for growth.

Our Consulting Services team is equipped to help you address challenges and ensure the long-term success of your business. To learn more about scenario planning for your credit union, reach out to one of the authors today.