Credit Union Geek

Marketing, Strategy, and The Force by Joe Winn

Tag: auto loans (page 1 of 2)

Unseen Credit Union Competition: “Respond Immediately!”

Credit unions aren’t just “cheaper banks”, nor are they “banks owned by the people”.  They’re unique community institutions.  At least, I still believe this.  Do you?

This article dives into what happens after a member closes a loan (auto or mortgage) with you. Specifically, we look at the solicitations they receive. And what your role is in helping your member understand it all.

Who’s Your Competition?

It’s tempting to think that your primary competition and challenge comes from the big banks. Sure, they offer similar products and target the same groups of people (ie. your potential membership). Their marketing efforts present them as a community-focused option.  They make it about their customers, not about the money.  I’m no expert, but it definitely sounds like they’re competitors.

It’s true.  They are.  And for many people, you can offer a better option which will save them money.  Yet, besides the exceptional record of Wells Fargo, the national banks don’t engage in “slimy tactics” or attempt to steal customers by just-nearly-but-not-quite misrepresentation.  On the whole, banks (both community and national) want their customer’s business and aim to gain and keep it through honest means.

However, there’s others with a slightly different agenda. This article looks at competition to credit unions besides banks, and how you can use your existing products, member relationships, and educational mission to beat them at their own game.

Loan Closing & What Comes After

Last year, I bought a new car.  Yes, I have a lot of fun when driving.

Shortly after, I began to receive letters in the mail much like this:

Real…ish

Packed in official-appearing envelopes (many had that, “fold each side and tear in order” government style design), with names such as, “Automotive Services Department” or some other bogus, yet “maybe they’re real?” title, they appeared in masse.  They encouraged, no, insisted I follow up immediately regarding my vehicle’s impending warranty expiration.  Never mind it’s a new car, with a 3 year factory warranty included.  I COULD BE AT RISK FINANCIALLY IF I DON’T ACT NOW! Of course, the action to take is to get in touch with whomever runs these shady enterprises (they’re not affiliated with any of your VSC providers, trust me) and make sure my car is protected.  Much protection, indeed.  “Do you cover diagnostic time and taxes?” is a question I would feel obligated to ask if I ever were forced to reach out.

Why mention these letters?  Because every time your member finances with you and every time they don’t, they’re getting dozens of mail pieces like this.  And this is what they ask themselves: Do I know for certain it has nothing to do with my credit union?  Is it a scam?  Can I get a better deal from here or my dealer?  Is it even something I need?  What’s the harm in a call?

It’s unlikely your members will ever ask you any of these questions.  But you can bet they’re asking someone, whether it be Google, that helpful voice in their head, or a spouse or friend.  You can be there for your members in more ways than you think.  And this is what sets you apart.

A Loan Closing Tip

Imagine if at every loan closing (that includes mortgages, because I get things like this for my house all the time), you had a short conversation about potential fraud and things to beware.

“Ok, Jenna, we’re just about done.  Are you excited?  Because I am!  Since we’re here for you across your entire financial life, we want to make sure you’re empowered to spot what’s real and what isn’t.  Here are some examples of letters you’re going to get in the mail, maybe even in your Inbox.

They’re not from us.

All of our communications will always include your member number and our logo. These make themselves look really official, and often have scary wording. Crazy, right?

Please look out for these and make sure any future interaction about your financing is with myself or someone else here at ABC CU.  I know it may seem silly, but we used to see many members fall for similar scams, and we want to help ensure you’re not one of them!

And as far as vehicle service contracts go, we’d be happy to have that discussion to see if it makes sense for you!  Does this make sense?”

Has anyone ever said that to you?  What if they did?  How would that make you feel?  A bit more trusting of your credit union, right?  That they have your back, and want to go above and beyond to keep you safe and secure?  That’s a credit union I want to do business with and share with my friends and family.

In a future post, we’re going to address GAP and warranty coverage (the legitimate ones) and how they differ (or don’t) between credit union, dealer, and insurance provider.  Later on, we’ll educate each other and members on buy-here-pay-here lenders.

It’s About Your Credit Union Mission

Remember, your mission likely includes something about ensuring your members live a financially successful life.  Here’s one easy thing you can implement which may make a big difference for your members.

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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.

Becoming A Dumb Bank

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.

Where “Faceless” Works

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.

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