As Consumers Change, CUs Lending Must Adapt

By Dan Murray

The U.S. lending industry is evolving rapidly as two enormous generations near key phases of their lives. The first wave of baby boomers is retiring as the first wave of Gen Y-ers start their careers and families. And all generations are fighting headwinds from the most profound economic downturn since the Great Depression.

In this environment, which lending products and technologies should credit unions explore? 

Create a Membership Growth Strategy
Lenders have to come to grips with the key differences between baby boomers and Gen Y. For example, Gen Y does not seem to be in a hurry to get married and create new households. According to the U.S. Census Bureau, the nation generated only 357,000 new households in the year ending in March 2010, down from an average of 1.3 million over the previous decade.

The consequences are serious for lenders because Gen Y (84 million) is even bigger than the boomers (80 million). Your credit union needs a specific strategy for growing membership, and especially for gaining the loyalty of younger members as they enter their big-ticket borrowing years. If your board does not have a committee devoted solely to membership growth, create one—use outside marketing expertise if you need it. 

Anticipate “Sticky” Services
By now, you know remote lending channels continue to grow. Cultivating multiple-relationship members is more important than ever, but these new channels make doing so more difficult.

Already, almost a third of mobile banking users checked their account balances at least 10 times within the last three months, according to a December 2010 survey by the financial industry technology firm, Aite.*

As people rely more on mobile banking to view account balances, move funds, pay bills and apply for loans, lenders must find ways to turn these from mere conveniences into more loans or non-interest income.

For example, a credit union’s mobile banking suite could help members research and secure a loan while standing on a car dealer’s lot. This could save members considerable expense in interest and payment protection products while avoiding a long sit-down with the dealership’s finance rep.

Adapt Cross-Selling
Even sticky services cannot build loyalty if members do not know these services exist; and credit unions cannot rely on traditional advertising alone to reach specialized target audiences. Credit unions must adapt to cross-selling via remote channels in addition to face-to-face situations.

At every opportunity—either remote or in person—lending staff will need to tell members how the credit union can save them money on loans. Or help them protect their family from financial hardship. While avoiding old-school, hard-sell tactics, credit unions have to learn to present the information simply and quickly, so members can make informed decisions.

Each credit union should continually examine its members’ specific life-stage needs and technological comfort levels. This is essential to an innovative, engaged lending culture that can anticipate relevant products and relevant delivery methods.

*Source: Bank Technology News, April 2011

Dan Murray is VP of Lending Product Services for CUNA Mutual Group

 

Questions? Contact Sales & Marketing Associate Craig Reed: 206.340.4789, creed@nwcua.org.

Posted in Marketing & Communications.