Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

Tag: credit union members

What Would Your Members Say?

Originally published on CUInsight.com

Imagine a room filled with your members. All of them. Ones who have made your credit union their primary financial institution and those who hardly know you exist. Offer each a blank index card.

A third grade teacher in Denver did this exercise with her students. What was asked of them? To write down what they wished their teacher knew about their lives. They could add their name or leave it anonymous. Surprising truths flowed. One explained how homework was challenging because they didn’t have pencils at home. Another lamented delays in getting their mom’s signature on school forms because they didn’t see her often. It was a moving exercise, and offered valuable, if heartbreaking, advice to the teacher.

Before getting back to the credit union talk, let’s make it clear: Teachers like her are doing important work and should be recognized/compensated as such.

Do you see how this exercise could be of value for your credit union? If you handed out index cards to all your members, what would be written?

When I’m teaching martial arts classes, I often ask a student what someone will do if they use a certain move. “I don’t know,” is a fair answer. How can you be sure of their reaction? Well, you do that technique, and see their response!

What will your members wish you knew? Well, you ask! We read articles daily about how to connect with Millenials (Gen Y). Like everyone else, they want a say. They want a deliberate effort to engage, not a new promotion or product. Connect and learn. What if it became an industry effort? Say, using social media under the hashtag #OurMembersWish. Now that’s @asmarterchoice I can support.

There’s a fantastic TED Talk describing one way to get into a mission, rather than product, centric, mode of thinking with a process called Golden Circle. You’ll recognize it in use with companies like Apple and Harley Davidson, in people like Elon Musk, as well as every non-profit you know.

The index cards? Yeah, they’re in that supply closet, just down the hall. Grab a bunch.

Image credit: https://www.flickr.com/photos/garylerude/2815430150/

Oh No! Millennials Aren’t Doing What We Expected!

The average age of a credit union member is 47. So it stands to reason the industry has a love affair with those of a younger demographic. If only they would talk about it!

Truth be told, a day cannot go by without seeing at least one discussion of Millenials and credit unions. Whether it be embracing technological solutions or offering a streamlined approach to lending, everyone has the answer to connecting with this essential generation.

There were challenges, however. Millenials don’t buy homes (mortgages), they don’t use credit cards, avoid owning cars (auto loans), and have no intention of changing. Like the disappearance of Tamagotchi pets, the needs of a generation had changed. Face it, it’s hopeless to even bother being in the banking industry anymore. We’ll be lucky if we can hold some of their meager savings.

Except all of this turned out to be false. When the average Millenial left school, they walked into a global recession, high unemployment, a banking sector in disarray, Wall Street in free-fall, and continuous threats of government shutdowns. Not an encouraging environment to make a stand!

So, they waited. Putting off moving out and getting new wheels for a solid career path, you can almost call them the Hesitant generation. Sure, adoption of technology, in every form, was rapid, but they also were the first to grow up with the Internet. It was a given they would be comfortable amongst cyberspace. The real world? Not so much.

Until things improved. Like now. Credit is more available and companies are hiring. Growing incomes situated them in up-and-coming urban centers. Big cities, sure, but also the smaller metro areas (like our own award-winning Fort Lauderdale) are experiencing dramatic influxes of young professionals. “Yeah, but in the city, they don’t drive, and they rent condos, so nothing changed.” Except not.

Millenials have grown into the second largest car buying group, behind their parents, the Boomers. You were right, they want the technology, and cool for these people represents efficient and modern. Out of reach of most buyers, the Tesla Model S still stands as the pinnacle of “cool”. No wonder other carmakers are pushing their own plug-ins, electric, and other forward-looking models.

They’re also buying homes. Renting was a necessary evil, and also helpful for a rapidly-shifting work environment. Now, denizens of the Millenial generation are able to “settle down” just a bit, and that comes with buying property.

Credit card usage is down, that’s accurate, but debit cards are embraced wholly. I see this as a financial literacy issue more than anything, which credit unions are ideally suited to address. Also mentioned in a recent post was the activities of CU Student Choice, helping CUs become financiers of student loans.

So this Millenials group…where do credit unions fit? Fund student loans, help them get started with debit cards, for a start. Be there for their new car loans, then help through the first mortgage. By providing time-honored service, coupled with the offerings people today expect (mobile banking, remote check deposit, online loan application, and compatibility with the latest must-haves), any credit union would be setting themselves up for a generation of success!

Sources: http://www.chicagotribune.com/classified/automotive/sns-wp-blm-news-bc-autos-millennials25-20150425-story.html, http://www.cuinsight.com/make-new-friends-reaching-the-younger-demographic.html

Image credit: https://bluesyemre.files.wordpress.com/2012/12/generation-x-y-z.jpg

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

© 2017 Credit Union Geek

Theme by Anders NorenUp ↑