Lending Leaders Embrace Technology, Innovation
CUs flourish despite competitive environment.
Unless credit unions embrace innovation and technology, and market to nonmembers, they’ll have a difficult time growing their loan portfolios.
Fortunately, many credit unions and their partners have accepted that challenge and flourished.
Here are a few examples:
With just six taps of a smartphone, Washington State Employees Credit Union (WSECU) members can apply for a short-term loan—and less than one minute later have access to as much as $4,000.
The $1.9 billion asset credit union in Olympia introduced its Q-Cash product (q-cash.com) a decade ago after a teller reported many members were writing money orders to predatory lenders.
WSECU offers a 60-day loan at $12 per every $100 borrowed, and an installment loan up to $4,000 with a 36% annual percentage rate. Both are available through traditional, online, and mobile channels.
Many members who take out these loans migrate to customary unsecured personal loans after building a credit history, CEO Kevin Foster-Keddie says.
CUNA Mutual Group’s AskAuto App ties together hot trends—consumers using mobile devices to aid in shopping and pent-up vehicle purchases.
CUNA economists predict double-digit auto loan growth for the second straight year. Meanwhile, more than 60% of consumers shop for a vehicle with a smartphone while on the dealer’s lot, and 25% of loan applications come to CUNA Mutual Group via mobile devices, according to Steve Hoke, CUNA Mutual Group’s director of loan growth products.
Credit unions should optimize their mobile lending channels and strive to be more accessible to members at all stages of the buying process, according to Hoke.
“It’s very important to serve members through mobile means and to make sure all of your channels, including face-to-face interactions, complement one another,” Hoke says.
Credit unions face a very competitive market for high-quality business loans from the banking community, says Bob Stowell, senior vice president/chief operating officer, US Federal Credit Union in Burnsville, Minn., and vice chair of the CUNA Lending Council, in CUNA’s Environmental Scan.
But UT Federal Credit Union has found a niche by seizing on the entrepreneurial spirit in Knoxville, Tenn., with its Line12Fund microloans.
Since launching in March 2014, the fund has made more than $205,000 in small-business loans to start-ups with a diverse product focus: video production, software platform integration, e-cigarette sales, and software development for on-demand poster printing.
Most small-business owners remain skeptical of crowdfunding and other alternative options, according to a recent survey by Manta, a small-business directory. More than 70% choose traditional loans, savings, credit cards, or assistance from family and friends.
Pennsylvania State Employees Credit Union (PSECU) in Harrisburg, Pa., offers a credit card with a 9.9% fixed interest rate and an attractive balance-transfer rate of 2.9%, with no balance-transfer fee or cash-advance fee, according to CUNA’s Environmental Scan.
The credit union understands that a majority of consumers with cash-back cards carry a balance and pay interest at rates of 18% or more—for the privilege of earning 1% to 2% cash back.
PSECU’s card appeals most to people carrying a balance, not to convenience users who simply accumulate points or rebates without paying interest.