Credit union lenders held a “speed dating” session of sorts Tuesday during the 2018 CUNA Lending Council Conference to discuss today’s top lending issues.
Moderators Dan Picard, consumer lending manager for City of Boston Credit Union, and Steve Quigley, vice president, select employee group and business development, for University of Iowa Community Credit Union, led attendees through these topics:
Digital lending and auto decisioning. The biggest impediment to using decisioning engines is the propensity for fraudulent applications submitted via the internet.
Lenders need to set parameters to curtail fraud—but not so much that they interrupt service to valid members.
Some credit unions segment current members, who are more trusted, and indirect members, who are less known. They also do so by credit score.
Serving generation Z. Financial education is an excellent entry point for this group. “We need to let them know how powerful FICO scores are, and what they’re getting into,” says one attendee.
Education extends to this group’s parents as well. “We build relationships with parents and their children for the future,” says another attendee.
Point-of-sale lendingoutside of indirect auto lending. Lifestyle lending—financing medical procedures, hot tubs, jewelry, and more—is a successful venture for some credit unions. It typically provides a healthy return with low delinquency rates.
Financial wellness. Providing financial counseling certification for collections staff works wonders for some credit unions.
Financial wellness efforts also are preferable to consolidation loans, which can continue a cycle of debt.
One credit union’s credit builder loan helps members understand the importance of credit and boost their credit scores. “We’ve made some good inroads with members by helping them better their credit scores,” an attendee relates. “We meet them half way. It’s like chopping down one tree at a time through the forest.”
Payday lending. Small emergency loans can provide an alternative to payday lenders, which charge outrageous interest rates. But many credit-challenged consumers fall back on old unhealthy habits.
Student loans. A big opportunity in student lending is refinancing. Delinquencies and charge-offs are low, yields are higher than on other loans, and borrowers typically want to repay them quickly.
Plus, it’s a good inroad into the young adult market.
Outbound calling. This is an effective sales technique for current and indirect members, as long as you hire the right people. Traditional branch staff, who have a service mentality, often aren’t suited to sales.
“There’s a different skill set involved when nine of 10 people don’t answer the phone,” says one attendee. “You have four seconds before someone decides to talk to you.”
Auto leasing. Rising interest rates makes leasing more attractive than buying for many consumers.
This product also attracts consumers with high credit scores and net worth.
One caveat: Understand the process from start to finish before entering into this business. You don’t want to interrupt the process.
The Winter 2023 issue of Credit Union Magazine explores award-winning marketing, board training on a budget, developments in instant payments, service to small businesses, and NCUA’s final rule on member expulsion.
