Two industry leaders weigh in on ways credit unions can overcome top barriers to expansion.
Whether they serve anyone in a branch of the U.S. armed services, employees of a single company or several enterprises, or those who live, work or worship in a small town, all credit unions have something in common: a drive to best serve their members and continue to expand.
“Growing a credit union—whether focused on account openings, new members, credit card applications or something else—can come with its share of challenges,” says Brian Scott, chief growth officer of CUESolutions provider PSCU, St. Petersburg, Florida. “However, some credit unions accidentally limit themselves without even realizing it. What are these barriers to growth, and how can credit unions overcome them?”
Barrier: Not Meeting Tech Expectations
“Consumers’ expectations for all the services in their lives are changing, and if credit unions don’t stay current with their members’ and potential members’ needs, it will inevitably diminish opportunities for growth,” Scott says. “Take, for example, business processes like requesting a new credit card. If a member loses his or her card and needs to request a new one, that member wants the process to be simple and seamless, while also gaining access to his or her new card immediately.”
Scott suggests that credit unions can meet these expectations by using readily available digital tools—for example, allowing members to flag a card as lost on their app and request a new one immediately, then generate a credit card number that can be used to populate a digital wallet right away.
“The common thread in many of these relatively new expectations is the need for digital-first strategies,” Scott says. “By using the latest technology, credit unions may already have the tools to digitalize their processes and meet members where they are.”
How to Keep Digital at the Fore
Other ways credit unions can keep digital at the forefront, according to Scott, include:
Self-service. Although some members still prefer to handle their business over the phone or in person, many members now want to take care of all their financial needs online. That includes the already mentioned functionality of being able to mark a card lost or stolen, digitally access cards or activate cards immediately. Enabling these self-service options puts control in the hands of the member for a more positive, digital-first experience, Scott suggests.
Connected experiences. Members can address their financial needs from many platforms, and ideally they should all work together. A member needs to be able to begin a business process on one channel, step away from it and then pick back up in another channel at the same point from which they left off.
Personalization. PSCU’s most recent Eye on Payments study found that personalization was one of the four key factors driving consumer payments preferences and behaviors. Using data from members’ personally identifiable information, preferred channel and engagement style (low or high touch) as indicated by past behaviors and feedback, credit unions can effectively optimize each channel experience.
Buy now, pay later offerings. As online purchases continue to grow exponentially, consumers are beginning to appreciate—and in some cases expect—the ease of use associated with BNPL or other installment payments. Credit unions should create a plan to best approach implementing a BNPL offering, Scott advises.
First, choose and develop your installment plan through a BNPL vendor. Options include pre-purchase (consumer opts in for installments before making the purchase), at-purchase (consumer is prompted at merchant checkout to pay with installments) or post-purchase (consumer converts a recent credit card purchase into installments). For a financial institution’s first BNPL offering, pre-purchase or post-purchase is recommended, as card issuers have more flexibility with these plans based on cardholder history, existing credit lines and regular cardholder interactions.
Barrier: Sticking to Old Ways
During the summer, CUs are in the middle of their busy lending season, putting growth at the top of their priority list.
“But 28 months into the pandemic, with rising geopolitical tensions, multiple planned interest rate hikes and deposits at record highs, growth in this uncertain environment certainly requires credit unions to break from the status quo,” says Jenna Chaffins, senior director, insights and marketing at CUESolutions provider Experian, Costa Mesa, California.
So, how can credit unions push through challenges to growth to see their numbers rise?
“Credit unions must pivot from their normal playbooks if they hope to increase loan growth and member wallet share,” Chaffins says.
How to Gain a Growth Edge
To give CUs an advantage during these times, Experian VP/Credit Unions Lisa Bonenfant recommends they consider these winning strategies:
Data and modeling. Using data to responsibly say “yes” to more loans is important. This starts with scoring as many members as possible. Conventional methods, according to analysis done by Experian, are often only able to score 81% of borrowers without extensive credit histories, leaving many creditworthy borrowers without fair access to credit. Using advanced credit scores like Experian Lift can help CUs score up to 96% of consumers, Bonenfant says.
Digital preapproval. Adding digital preapproval not only contributes to loan growth but can enhance the member experience, Bonenfant adds. Additionally, this process can drive financial inclusion by allowing members to easily check preapproved loan amounts and interest rates, ultimately putting them in the driver’s seat.
New products. Some experts predict a resurgence of credit card and home equity lines of credit in 2022 as consumer spending broadens and mortgage originations decline. Another opportunity is identifying niche lending products.
Market smart. Credit offer personalization is an important element of invitation-to-apply campaigns, Bonenfant suggests. Combining member data with marketing data not covered by the Fair Credit Reporting Act allows CUs to send invitations that meet the specific needs of the member.
Smarter cross-sell efforts. Finally, consider adding more intelligence to your efforts to cross-sell. Identifying members who are already in the market for a new home or vehicle allows for a timely targeted offer. Or identify and target members you can help save money by lowering their interest rate using data from Experian or other providers. cues icon
Celia Shatzman has penned stories on topics ranging from beauty to fashion, finance, travel, celebrities, health and entertainment