In the quest for growth and profitability, many credit unions have found a new focal point: existing members. They’re seeking more business—or wallet share—from the members they already have. And many credit unions are finding plenty of room for growth.
That means many members do a lot of business elsewhere, which represents a big challenge—and opportunity.
While members’ use of convenience services is—for the most part—evenly split between banks and credit unions, members seem to turn to banks more often for loans, CUNA reports.
Since 2009, credit unions have slowly lost their share of members’ vehicle loans, first mortgages, and home equity loans or lines of credit.
Four years ago, credit unions had 74% of their members’ vehicle loans. Now, they have 57% of those loans.
To regain lost wallet share and build their loan portfolios, Bill Vogeney, senior vice president/chief lending officer for Ent Federal Credit Union, Colorado Springs, Colo., advises credit unions to take these five steps:
1. Offer a reduced rate to members who have low balances on their current auto loans.
2. Review existing home equity lines of credit and offer special incentives on new advances to members with low levels of credit-line utilization. These loans have already been booked and you’ve already expensed most, if not all, of the origination costs.
3. Avoid the trap of increasing unsecured lines primarily on “slam dunk” borrowers who have high credit scores and owe little on their credit lines. High-potential accounts are more likely to have FICO scores of less than 700, owe 80% or more of their cumulative revolving lines, and owe within $500 of their credit limits.
4. Stop relying on marketing campaigns that reach members only once or twice. Integrate prequalified credit offers into electronic statements, and combine email reminders into the “offers” section of your home banking and mobile banking platforms.
Keep front-line and call center staff in the loop—they’re the most effective at reaching members and making sales.
5. Dedicate more resources to analyzing loan denials. Look at a large sample of your denials and you might find some overlooked opportunities.
A question was recently posed to CUNA’s compliance staff about the Right to Financial Privacy Act. Specifically, what type of documentation is required from a federal government agency when it requests financial information on a member?