When members without “A” or “A+” credit ratings apply for loans, the response at many financial institutions is an automatic “no.”
But Texell Credit Union, Temple, Texas, developed diverse lending products that made it possible to say “yes” to members who might otherwise not be considered creditworthy, says Tony Hale, CEO of the $163 million asset credit union.
“We introduced a lot of loan products that are small in size but reached a lot of people,” Hale says. “It reintroduced us to our members as the place to go for loans.”
These products include:
• Credit builder loans, which help members rebuild their credit histories and establish emergency savings.
A member who qualifies for a $600 loan, for example, can get $100 immediately while $500 is placed on hold in savings. As payments are made, the member gradually gains access to the savings balance.
• Holiday loans, which are open to borrowers who’ve been members for at least one year and have qualifying direct deposits.
Members may borrow up to $1,000 for the first holiday loan and repay it over 12 months. If members make payments on time, they qualify for a $1,200 loan the following year and more in subsequent years.
The program generated more than $500,000 in loans during 2008, $1.1 million in 2009, and $1.6 million in 2010.
• Employer loans combat payday lending with small loans of up to $500 for members with direct payroll deposit. If members make payments on time, interest is refunded at the end of the loan.
Internally, Texell prepared front-line staff to say “yes” more often to members’ requests by adopting a new sales culture focused on offering loans and other products aligned with members’ needs.
The hardest part of moving to a sales culture was reassigning employees who were unsuited to sales, or watching them leave to take jobs outside the credit union.
“You can’t send out an e-mail and say, ‘starting Monday we’ll have a sales culture and everyone needs to sell more,’” Hale says. “We get very specific in terms of each employee and each branch and what we expect them to do on a daily basis, and we give them techniques to help them succeed.”
A sales specialist is expected to make about $240,000 in loans each month, while call center loan consultants are expected to generate $700,000 per month in loans.
All employees with sales duties are expected to work one or two nights a month to make outbound calls. Training, rewards, and incentives help sales staff reach their potential and maintain a lending satisfaction score of 4.87 on a five-point scale.
“If you put everything in place and then get out of employees’ way, they’ll amaze you,” Hale says.