Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

Tag: lending (page 1 of 2)

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

Lessons From a Long Run

Regular readers may remember that I participated in the runDisney Princess Enchanted 10K. It was a fabulous event, despite the cold temperatures and early start time. After that race, my running partner and I committed to even more…a half marathon, hosted by Disney once again, in November. We are signed up, and just finished our first “dress rehearsal” training run. Covering over 14 miles of south Florida terrain (a half marathon is 13.1 miles), we learned another meaning of endurance.

When the weather is nice, it’s to the outside we go. However, our normal training is indoors, on a treadmill. Bor-ing. There, you are painfully aware of every milestone. I begin to measure based on other people’s workouts. “The guy in the black shirt has finished three sets…guess I’ve gone another half mile. The girl on the sit up machine is nearly through all the angles…half mile, perhaps?” Or, you have the TVs, with terrible news, a cooking show, and some soap opera. At least give me some reruns of Stargate SG-1, you know! Headphones make it better, but music becomes a distraction, not an activity.

The half marathon distance eliminates these challenges. It’s not like we were going to even bother doing it on a treadmill! We ran to a nearby park, circled part of it, and rounded back home. On this route, we watched the model airplanes being flown, cheered on those playing disc golf, and people-watched at the grocery store, along the foot paths, and more.

We were focused on everything around us and still working towards acomplishing our goal. In fact, by being less focused on our distance, we were more easily able to achieve it!

Same goes for your credit union. You’ve got monthly, quarterly, and annual goals. Do you hover over them like a hawk? Or, do you understand what they are, then “forget” and do your best to serve your members?

On a long run, you cannot see your finish line. It’s there, but so far away. So, instead of squinting and searching the whole time, enjoy what’s around you. Before you know it, you’re traversing the final quarter mile, exceeding your lending goals, and looking success right in the face!

Image credit: http://a.dilcdn.com/bl/wp-content/uploads/sites/2/2014/04/LionKing_Simba.gif

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