With some households still experiencing major financial setbacks, credit unions may have to focus on their existing members first to grow their loan programs.
Patrick McElhenie, sales planner for CUNA Mutual Group, offered that suggestion Tuesday during the company's third-annual Online Discovery Conference.
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“Let's not forget, our members are our owners, but more importantly, they will do the advertising for us based on their satisfaction,” McElhenie said. “Quite often credit unions are all too timid in sharing what they can do for their members.”
During a session on translating lending trends into strategies to fuel growth, McElhenie said members are more cautious today because of the current economic environment and the financial obligations they already hold.
“We've seen major setbacks in household net worth,” McElhenie said. “Some recovery has occurred, but households don't have the resources they once did, which we see in members' spending and borrowing habits.”
Still, while there's a lack of household demand for loans because people are paying down their debt and spending less, some are looking at lending differently.
“People don't 'go and get a loan' today, they see financing as a product feature, making point-of-purchase financing boom,” McElhenie said.
Despite economic changes and member habits, the key is to focus lending efforts on existing members first, McElhenie told attendees. Many don't know where to begin, though, he noted, a good place to start is by looking for loans to rewrite for members.
“Help those who are struggling with onerous terms from other lenders,” McElhenie said, adding to then begin looking to young borrowers to develop the next generation to replace those baby boomers who are no longer borrowing.
McElhenie reminded credit union attendees that not everyone is in financial trouble or about to lose their job, so it's in the credit union's best interest to help these credit union members take advantage of some great bargains in the home and auto market, especially young members just beginning to build a life and home. Begin a first-time borrower program, McElhenie suggested.
To grow your lending business, McElhenie said to consider adopting a “we are one” attitude at your credit union for auto loans by issuing the same rates and terms for direct and indirect loans.
“Most members will gravitate to a point-of-purchase transaction, but, remember, the goal is just to get the member's loan,” McElhenie said. “And don't forget about your community. The community is your yard, don't neglect it.”
Reward card programs that give back to the community have had large success, too. McElhenie said one such example is the HutchCard, a Visa card issued through the $189 million Hutchinson Credit Union in Hutchinson, Kan. The credit union raised more than $200,000 for the Hutchinson Zoo and city parks over the 10 years of its existence.
“You must create your own recovery,” McElhenie said “The economy will continue to move slowly forward, interest rates will remain low and consumers cautious, but you have the tools to help your credit union grow. Focus on your members and community, the rest will come.”
CUNA Mutual said more than 1,800 credit union and league staff signed on for the free Online Discovery Conference.
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