The credit union system is sitting on $290 billion in net worth. It is also losing a second consecutive generation of members. Maybe the two are connected?

I’m one of those podcast people. There are a select few I listen to, but I indulge in them religiously. As a rule, they cover anything but marketing or finance—the two subjects I spend 18 hours a day thinking about—but perhaps unsurprisingly, I’ll typically find a way to make a connection regardless.

Here’s one. A few years back, I brought up a Malcolm Gladwell podcast during a fundraising strategy meeting with a 501(c)(3). More specifically, I brought up an episode grounded in the story of Smaug—the dragon from Tolkien’s The Hobbit. Smaug sits atop a mountain of gold, lethally guarding it. In that episode, Gladwell explains that to Smaug, the treasure is the point; using it, any of it, is antithetical. But Gladwell, like me, posits that sometimes you don’t need more of a good thing; you need to put what you have to use.

I’ll let you guess whether my analogy was appreciated in that fundraising meeting or not…

Is that 15% capitalization or are you just pleased to see me?

I revisited that episode recently after returning from presenting my “Five ways to save $1M” keynote at a league event. It must have been well-received, as a dozen or so folks emailed me afterwards, one of whom asked me this: “What is one thing you see smaller credit unions continuing to spend time or money on that you think we should stop doing or completely rethink?”

After watching me stand on stage for an hour, sharing ways credit unions can reduce their wasteful spending, it was a fair question to ask, but my immediate response was that, actually, I believe credit unions sit on too much capital, and smaller ones in particular need to put it to better use.

A “well-capitalized” credit union needs a net worth ratio of 7%, and yet as of Q2 2026, the credit union movement’s aggregate net worth ratio sat at 11.42%. In fact, net worth grew by $21.2B over the past 12 months, reaching $291B nationwide. Now, the average shop is carrying almost two-thirds more capital than the regulatory minimum requires.

Younger people are ignoring credit unions—for good reason

Meanwhile, however, while credit unions are sitting on an ever-increasing capital hoard, digital banks and competitive FinTechs are hoovering up market share. Last year alone, one FinTech (SoFi) opened more new checking accounts than the entire US system combined. One.

And that lost market share is overwhelmingly the younger members who could provide our system with long-term growth. Baby Boomers now make up 39% of credit union membership, up from 28% a decade ago, while the system has primary relationships with just one in five Millennials and a worrying 14% of Gen Z.

Time and time again, however, we’ve been given the answer. Gen Z, like their Millennial counterparts before them, are extremely consistent with their feedback: systems and service will make or break the relationship.

We know this. For years we’ve been talking about the “Amazon experience” (although personally I like my money in my own account, not left in an arbitrary doorway somewhere three blocks over) and yet in 2025, just over a quarter of credit union checking accounts were opened digitally, meaning despite all the talk, the vast majority of credit unions still require an in-branch process. And for every checking account completed online, by the way, three times as many were abandoned. Woof.

As a system, we can’t complain that younger members are banking elsewhere when they have told us, unequivocally, what it would take to get their custom, and rather than making the investments, we sit on the capital.

Are we suffering from exhibit hall ambivalence?

Let me be clear: I’m not suggesting credit unions blow their capital reserves on a fancy rebrand or an influencer strategy, and I’m also not naive enough to ignore the reality that net worth, particularly for smaller institutions, is hard-won and slow to rebuild. However, there’s got to be some middle ground between regulated capital reserves and watching $291B grow at 8% a year while our system loses digital account applications at a rate of 3:1.

What we’re talking about here is table stakes (man, I hate that phrase). There is an entire FinTech ecosystem out there that, unlike overt competitors, actually relies on credit unions to survive. These are institutions designed to facilitate and streamline onboarding, to support real-time transactions, to minimize risk and reduce fraud; the bare minimums today’s consumer (of any age) expects.

Some of these organizations are smaller, more nimble—which often means price can be more palatable—while others are larger, more mature, and yes, maybe cost a little more to onboard but boast a generation of knowledge and experience in helping credit unions grow.

There’s not a person reading this who hasn’t walked past these folks in an exhibit hall. For both sides in that scenario, maybe it’s time we prioritize some of those awkward sales conversations (yes, money does have to change hands) over chintz, and get to what this system does best: working together.

If you can’t beat ‘em, at least join ‘em

The NCUA can’t be positioned as an obstacle here, either. The agency’s Deregulation Project is designed to give well-run credit unions room to innovate, and I’ll argue all day long that a functioning website, digital account opening, and an effective digital member engagement strategy fall a fair way short of “innovation.”

Ultimately, credit unions of every size may be sitting on their own ability to win back member share, to deepen member relationships, and to genuinely grow and thrive into the future…but Smaug sure likes his gold.