BOSTON — In what is a controversial proposition, one person is suggesting banks should consider acquiring credit unions to bolster retail deposits and compete with digital financial platforms, arguing the bar for doing so isn’t as high as many believe.
The proposal was made in a blog post by Jeff Marsico of Wolf & Company, who argued that shifting consumer behavior—particularly among Millennials and Generation Z—has eroded traditional bank loyalty, as customers increasingly move funds to fintech platforms and higher-yield accounts.
Even older consumers are treating primary checking accounts as pass-through vehicles, he wrote, citing the “paycheck motel” concept popularized by Ron Shevlin.
To respond, Marsico said banks need greater scale, particularly in retail deposits, which he described as the “foundation” of community bank funding. He contended that credit unions represent an “untapped reservoir” of such deposits, even as many face their own consolidation pressures.
‘Can and Should Buy Credit Unions’
“Banks can—and should—buy credit unions,” Marsico wrote.
The idea contrasts with recent industry attention on credit unions acquiring banks, a trend that has drawn opposition from banking trade groups. Marsico said the industry should instead pursue what he characterized as a “reverse” strategy.
Speaking at an American Bankers Association Washington Summit panel, Marsico said legal and regulatory barriers to such transactions may be less prohibitive than widely believed. He pointed to existing federal statutes and rules governing credit union asset sales as providing a pathway for acquisitions.
He cited a proposal by the National Credit Union Administration that would revise rules that could ease conversions to mutual bank structures, potentially making deals more feasible.
Outperforming Credit Unions
Marsico argued that banks often outperform credit unions of similar size on efficiency metrics, despite the latter’s tax-exempt status, and said larger or stock-owned banks could be better positioned to absorb acquisitions due to their ability to raise capital.
Still, he acknowledged challenges, particularly the requirement that a credit union’s value be distributed to its members in an acquisition, which can pressure a buyer’s capital levels.
Marsico suggested smaller credit unions facing succession or scale issues could be potential targets, especially in transactions that provide members with depositor rights in a mutual bank.
‘Tools are in the Manual’
He concluded that current market and regulatory conditions create an opening for such deals and urged bank executives to pursue acquisitions rather than oppose credit union expansion.
“The tools are in the manual. The law is on the books. The market demand is clear,” Marsico wrote.
