What lending strategies and tactics have proven successful for credit unions?
That question served as the foundation for a roundtable discussion on consumer lending trends that drew a packed house of credit union leaders at the CUNA Lending Council Conference in Las Vegas.
Participants covered the spectrum of lending sectors, including direct and indirect auto lending, credit cards, student loans, and collections. The session also enabled attendees to ask questions and gain input from their peers.
Credit union representatives shared a slew of success stories that other credit unions can replicate, in areas such as:
• Direct auto lending. Net Federal Credit Union in Olyphant, Pa., trains front-line staff to check its computer system during interactions with members to see if they have auto loans with the $185 million asset institution, says CEO Clarence Baltrusaitis.
Employees inquire about members’ interest in an auto loan if they don’t already have one. Staff receive up to a $50 incentive if a member switches his or her auto loan to the credit union as a result.
Massachusetts Institute Tech Federal Credit Union in Cambridge, Mass., sends a blank check to members it has approved for a loan, says Robyn Petersen, manager of consumer lending for the $493 million asset credit union. Members simply fill out the check when they want to purchase a car, and the auto dealer sends the paperwork to the credit union.
“It makes it a quick and easy process for the member,” Petersen says.
• Indirect auto lending. Focus on forming and building relationships with auto dealers, panel participants urge.
Service Credit Union in Portsmouth, N.H., has a 12-person indirect lending department and ensures someone is available 24/7 to handle inquiries and render a decision within 15 minutes, says Fawn Terwilliger, vice president of lending.
The $3 billion asset credit union always has at least two employees on the clock who can give a decision on a loan request. That availability is key to cementing relationships with auto dealers.
“If you can get the dealer to like you, work with you, and know your programs and services, the dealer will stay with you,” Terwilliger says.
Tucson (Ariz.) Federal Credit Union also traces its indirect lending success to speedy loan decisioning and dealer relationships, says Ellen Yacovone, vice president of lending and collections at the $398 million asset credit union.
“We went to automated decisions, and now the dealers get an even faster response,” she says.
Tucson Federal surpassed $5 million in indirect loans for three consecutive months after switching to the automated decision-making process, compared with $3.5 million per month last year.
• Rewards credit cards. At East Traverse Catholic Federal Credit Union in Traverse City, Mich., members who use their credit card rewards points toward their children’s Catholic school tuition receive a 10% bonus, says Nicholas Schmitter, vice president of lending.
This has driven business from schools and parents to the $53 million credit union.
Clearview Federal Credit Union in Moon Township, Pa., modeled its rewards card after a product Southwest Airlines offers, says Jim Wood, vice president of lending at the $1 billion asset credit union.
Members receive points based on purchases, but also for products and services they use at the credit union, such as a checking account or receiving e-statements. Members can use those points for merchandise, cash back, or to “buy” a lower interest rate on a loan.