Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

Tag: auto loans (page 1 of 2)

Are You A Dumb Bank? (Part 4ish)

Originally published on CUInsight.com

This is a spiritual continuation of a series from a while back, titled Are You A Dumb Pipe. The idea is related; read on to understand how. 

For every 100 members buying a car, 8 will pay in cash and 30 will lease, leaving around 60 which continue to be an opportunity for your credit union. Of those, many will simply finance at the dealer, signing with captive or another indirect lender. Was it yours? Maybe. Probably not.

Since most people pay for cars at the dealer, it only makes sense to pour resources into indirect, right? Operating in this fashion reminds me of my post on being a dumb pipe. Take a look.

Indirect lending is making your credit union a dumb bank. Your members won’t know who you are. They don’t care. You’re a line in their bill pay platform, and it’s probably set to automatic, anyway.

I’ve spoken to the lending teams at many credit unions. The allure of indirect is strong. Do nothing, get auto loans. As long as you approve and fund them in good time, you’re done. I’ll be honest; I have lost some business to it. However, it is costing the credit unions much more. It’s no different than the internet providers being just a dumb pipe (which, with the loss of Net Neutrality, is sure to change). You become a faceless lender.

Credit unions see financial interactions in a different way than any other institution. It’s what makes you, well, you. And not a random bank. Right? I mean, if I’m wrong, say so and continue down the path you’ve set. Become the faceless money storage and lending facility.

It’s true, there are a lot of people who will never care about their bank, credit union…whatever. When it does what they expect, it’s another utility which receives little attention. If something goes wrong, well…”geez, this bank just sucks!” You can try to engage them, but the decision is theirs.

However, if you are in any way trying to fulfill your mission statement, this is not the path forward. As your services become commoditized, your interactions devolve into support requests and complaint resolutions. You lose the ability to help your members in all the unique ways available to credit unions. Financial coaching? That would have been nice. Investment guidance? I’m sure they’ve got it handled. Even a simple grasp of how fee structures or interest rates can affect someone long-term? Hey, if they don’t know you, they don’t engage.

Am I saying indirect and other “faceless” services are bad? Not at all. They serve a valuable role in boosting asset volume in many credit unions. If it fits your strategy, and is properly accounted, then why not enjoy the growth it can deliver? However, I have noticed a growing trend of institutions putting more resources into this basket…at the expense of their direct channels.

There are a lot of industries where your company can remain unknown while also a part of everyone’s life. That works if being faceless yet ubiquitous fits the mission. I don’t believe it does for the credit union industry. Do you?

Data Security: Car Edition. Really.

Originally published on CUInsight.com

When you hear “data security”, what comes to mind? Your laptop? Phone? Internet of Things “smart” oven? (I’d hate to let a hacker know how badly I burnt that casserole)

Anything else? How about your computer on wheels?

Modern cars are rolling supercomputers. They have dozens of systems collecting unique data to make your driving experience safer, more enjoyable, and sometimes more distracting. For example, the traction control computer collects information on road conditions hundreds of times a second. However, it’s probably not a source of identity theft (though what could be learned from its records would surprise you). Nor is the network of proximity sensors to help you navigate tight areas.

Your car does contain a number of personalized systems. Let’s look at the big ones:

GPS: Your car knows where it is at all times, where it has been, the paths you take, and even the speed at which those drives were made.

Bluetooth: When you pair your phone, it does more than share a 4-digit code. To automatically reconnect, the car remembers your phone’s unique ID. This isn’t a huge privacy issue on its own, but today’s cars save far more. To make dialing easier, a lot of systems import your contacts and synchronize your text messages. No big deal, just your entire phone book and call/text history.

HomeLink: Do you have buttons on your mirror or visor? Do they open your gate/garage? Then you have HomeLink. These can even support turning on/off lights, though new smart integrations have made that a bit redundant. Combined with the GPS history, this is the biggest privacy risk in your car. The former tells anyone in the car where your house is located. The latter Opens. Your. Home.

Those are the big three. Others vary by manufacturer and features. Things like a custom entry code (many Ford vehicles still use this feature…do not choose a birthday!) are seen on occasion. App integration is becoming more common, making your phone an advanced car key.

So, what of all these features? I’m a huge fan of integrations which make sense, and I use them often. However, I also know there is a level of security necessary. To add a small degree, I never program my actual home address into the GPS. The “point” is around the entrance to my community, not in my driveway. Do you really need those last 4 turns? Granted, someone could just find my address on the registration, but I’m hoping a potential thief is just too dumb to consider such an option. Why make it easy? Note: My garage opener doesn’t reach from the home “point”.

It’s good to know what these features can reveal while you have the car, but what about when you sell it?  Given the privacy/security risk inherent, I find it almost criminal that an easy “I’m selling my car, delete everything” button is not available in every car. For mine, I’ve had to do the following:

  1. Delete my phone pairing from the car.
  2. Remove the “Home” location in my GPS.
  3. Remove all recent waypoints in the GPS.
  4. Reset the HomeLink buttons.
  5. Cancel/transfer satellite radio service (technically, with an active Radio ID, one can use a phishing strategy to get my personal information from SiriusXM)

You’re right, there is no direct credit union guidance in this post. However, given my recent experience in buying a new car, I felt it necessary enough to share. Be honest, how many cars do you think are traded-in with the prior owner’s home address and garage code?

Help protect your staff and membership by sharing this with everyone! (And along with every booked loan)

Image credit: That’s me, while owning two cars.

One Third of Them Means Half of This?

Originally published on CUInsight.com

Keep me honest. I’ve been known to ask for help in finding my sunglasses…while I’m wearing them. Hey, they’re lightweight and comfortable! So if I’m overlooking an important point, please guide me in the right direction. In this situation, I have a nagging feeling the industry is doing just that.

We’re talking auto loans. Or rather, auto loan funding.

If my data sources are correct, credit unions handle 16.7% of auto loans in America(1). Not too shabby. In fact, that’s a lot of loans, a whole bunch of cars, and millions of people receiving rates likely better than from a for-profit bank. Congratulations financial co-ops!

Hold off on swinging the “We’re #1” foam finger for just another minute. A previous post celebrated an announcement from CUNA of credit union penetration. 1 in 3 Americans. 100 million members. So why only 16.7% of auto loans?

Some digging ensued and it didn’t take long for the digital shovel to strike a proverbial wooden box. Upon opening it, I learned there was a leak in the ship.

Credit unions do, in fact, accept auto loan applications for 33% of Americans. However, only around half ever get funded. That’s 50% or 1 in 2 members.

What’s half of 33%? Not too far from 16.7%. Wait a minute, I’ve heard that number before! Isn’t that the total percentage of auto loans credit unions hold in the market? Weird, right?

Could it be that credit unions are receiving all the applications they need, yet, for various reasons, are losing out to other lenders? Sure, you have high underwriting standards, and not everyone qualifies; you don’t need to rationalize to that end. However, there is still a loss. You’re putting effort into underwriting these loan applications; be bothered by losing half of them!

From reducing flipped loans with the convenience of share drafts to the personal touch of a member representative calling on every loan approval, there are credit unions making strides to confront this issue. What are your numbers, and could reducing a portion of the lost half make a difference in your 2015 goals?

Disclosure: My company works with credit unions to help increase booked loan percentages as well as their total auto loan volume. It is in our, and the industry’s, best interest to identify sources of lost income and maximize growth for institutions and their members.

Image credit: http://sme-blog.com/files/2013/09/TSBB_Development-440×402.jpg

(1) Experian, Q3Y14

Older posts

© 2018 Credit Union Geek

Theme by Anders NorenUp ↑