This year was one of new challenges—and challengers—for credit unions.
Several new financial technology (fintech) start-ups began playing a significant role in the financial services industry, forcing credit unions to rethink how they attract, serve, and lend to their members.
These challenges will, eventually, lead to new opportunities for credit unions to solidify their relevancy and grow market share.
As we look to 2017, we anticipate another strong lending year for credit unions.
CUNA Mutual Group Chief Economist Steven Rick forecasts credit union loan balances to increase 9% in 2017, building on August 2016 data which indicated credit unions’ share of the consumer installment credit market grew to 10%. That’s a pace of growth more than double that of all other lenders.
As the economy remains steady next year, credit unions must seek to serve as their members’ primary financial institution for auto loans, mortgages, and other forms of credit to maximize loan growth in the coming year. Here are three ways to do that.
1. Capitalize on pent-up auto loan demand
Economic indicators point to favorable conditions that will allow credit unions to expand their strong auto loan market share, including forecasted record sales of more than 17.75 million new vehicles in 2017.
This, coupled with continued low unemployment and low loan delinquency, promotes a positive climate for auto lending.
The key is to capture members’ auto loans before they explore alternative financing from a fintech disruptor or dealer financing.
Emerging lending start-ups are eager to capture a slice of this segment. But credit unions can build upon competitive rates and member loyalty by delivering a seamless member experience to thwart their efforts.
2. Make it simple and seamless
A recent Price Waterhouse Coopers (PWC) survey revealed the key to auto lending is “having a fast end-to-end [loan serving] process.”
Many loan applicants are using their mobile devices to not just shop for vehicles and compare options, but to apply and close their loans.
Credit union members have applied for more than $3.3 billion in auto loans via mobile apps, and nearly one in every three loan applications originates on mobile devices.
The PWC study also showed that a majority of all key generations targeted for loan growth—millennials, generation X, and Baby Boomers—all prefer a digital loan process as opposed to the traditional face-to-face channel.
3. Adapt and evolve
Credit unions must be willing to adapt and evolve to sustain their lending success.
Start-ups continually evolve new financial and insurance models, challenging the norm and putting more pressure to simplify and improve the process.
By staying current on trends in data, digital channels, technology, and the online experience, credit unions can determine where to invest to meet changing member needs.
Overall, 2017 presents a great opportunity for continued credit union loan growth. But to maximize the New Year’s potential, credit unions would be wise to remember what Charles Darwin once said: “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change.”