Getting more strategic about loan growth

first_img 15SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr,Celeste Cook Celeste Cook is founder and President/CEO of cuStrategies, LLC, which provides strategic planning services, consulting services, and training programs to the credit union industry. She is also a keynote … Web: Details As a credit union leader, do you ask yourself what you can do differently or better to ensure loan growth that equates to future profitability and member retention? It’s a question many, if not all, credit union leaders ask themselves on a daily basis because they obviously want their CUs to be successful and become the primary financial resource for their members. So what does a credit union have to do to achieve such a secure future?Successful credit unions find a way to create a culture that engages all staff to elevate the financial institution to achieve greater success – in this case striving for greater loan growth. Sure, many credit unions are doing pretty well now in the post-recession era. But what can they do to take it up a notch or two to weather another storm?This may seem painfully obvious but offering the right products and services at the right time is key. Ok, that’s easy to say, but what are the right products and services people who live and/or work in your communities need and desire today?When talking to them, you’ll probably start to see patterns emerge after conducting surveys, seminars, and other feedback mechanisms.  For example, 18- to 24-year olds tend to do business with and are loyal to the first financial institution that gives them their first credit card and/or first auto loan.  Mobile banking and e-services tend to be secondary considerations.To appeal to this market and other markets, below are a few ideas that could spark increased loan growth, profitability, and loyalty/retention:100% financing on automobile loans bundled with a credit card for first-time borrowers and/or recently discharged bankruptcies pricing for risk with E paper rate.  Don’t lose loan opportunities by requiring a co-signer and/or 20 percent down. This provides a great opportunity to capture the 18- to 24-year-old market and build loyalty with individuals with character who have faced challenging times in their lives such as job loss, income loss, divorce, and/or medical circumstances.Secured credit card that can immediately boost a member’s credit score especially for individuals who have no credit score due to lack of credit history as well as individuals who have recently been discharged from bankruptcy (because their credit cards have been closed.Free credit score analysis (CSA) that gives you the opportunity to review individuals’ credit reports to look for ways to lower their payments on loans with other financial institutions; eliminate high-interest rate credit card balances; and raise the credit score.Credit score management seminars to educating people on how they can manage, protect, and raise their credit score (onsite one-hour “lunch and learns” for businesses)Consumer credit counseling solutions that allow people to reduce interest rates as high as 29.99% to rates as low as 2% in some cases saving people up to hundreds of thousands of dollars during their lifetimeTaking the previous ideas into consideration, here are some risk-based lending strategies:Price slightly below the competitionPrice for profitability according to the risk levelEstablish an “as low as” marketing rate (24- or 36-month term) to attract all members and potential members to your credit unionCreate a “Match” or “Beat” program to retain A+ or A-rated membersDevelop an auto loan pre-approval program that entails getting $100 when auto loan closes if you get pre-approved for an auto loan before shoppingGenerate a $100 refinance program that allows a person to refinance a loan from another financial institution and receive $100 when the loan closes with a focus on “lowering their monthly payment.”These ideas are certainly worthy and proven to work. Hopefully, they will generate more quality profitable loans and increased retention. But these ideas aren’t worth a hill of beans if you don’t understand the dynamics of the economy and the impact it is having on credit unions as a whole. This understanding allows you to establish and maintain a holistic leadership approach to greater financial strength and growth. For example, here’s a snapshot of Maryland credit unions (source: CUNA as of May 2014):Number of credit unions                      100 (headquartered in the state)Estimated memberships                      1.5 millionMemberships in credit unions            1.7 million (headquartered in the state)Media asset size                                     $28 millionMembership/population                      30.6% (based on 2010 US Census Bureau population of 5.7 million)Based on this analysis, the opportunities for credit unions’ growth in Maryland is 69.4% — which leads us to some key lending strategies to capitalize on these opportunities.With a nearly 70% growth opportunity rate, for instance, credit unions in Maryland have ample possibilities to increase their consumer loan activity. This increase leads to capturing more quality and profitable loans: new members equal new money, which leads to deeper relationships and future business.You can also capture new loans with existing members who have outstanding balances at other financial institutions – enticing them by asking them if they would like to lower their monthly payments on all loans that are not with the credit union. Auto loans and high-interest rate credit card debt are low-hanging fruit to target.Other strategies include increasing loan yields, minimizing delinquencies and losses with risk-based lending management checklists/manuals, and maintaining a strong capital ratio. For example, a 1% increase in average loan yield adds $100,000 to the bottom line on every $10 million in a loan portfolio.Appalachian Community Credit Union, for instance, executed many of these strategies and increased its consumer loan yield from 6.21% in Q1 2013 to 8.26% in Q4 2013.As you can see, the proof is in the pudding here with these strategies – and the opportunities are certainly out there on which to capitalize. So the next time you are asking what you can do differently or better to ensure loan growth, profitability, and retention, remember these ideas for future growth and value that ultimately positions your credit union as a primary financial institution. Talk about long-term business activity for member attraction and retention; this is your ticket.last_img read more

Bi-direction channel banking, the next step in the customer experience

first_img ShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr by: David GibbardOmni-channel banking correctly places members at the center of the banking experience. Allowing customers the ability to access multiple banking channels while providing the customer the ability to begin a transaction on one channel and complete the process where they left off on another banking channel is integral to the successful implementation of an omni-channel strategy. Bank and credit union customers are beginning to expect to be able to move between banking channels using a simple, intuitive, consistent and interactive user interface.Successful implementing of an omni-channel banking experience may seem like the epitome of customer service success. It is not, it is only halfway there. The best customer experience can only occur if both the customer and the credit union customer facing teams are on the same page, accessing the same information in real-time, without having to migrate through and between multiple banking systems. Financial products and services are often complex and numerous, resulting in many desperate banking systems that may or may not effectively communicate with each other. Middleware and a front-end UX system that can interface with these different systems and display the information in a user friendly, coherent manner is required for a bank or credit union to be able to deliver a successful customer or member omni-channel banking experience.Omni-channel banking is providing the customer or member with access to all banking channels in a seamless and unified manner. Providing BOTH customers and credit union employees with access to all banking channels in a seamless and unified manner closes the service/user experience loop, which I call “bi-direction channel banking”. continue reading »last_img read more

9 must-read payments articles from 2014

first_img 8SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr The Apple launch and — some say — subsequent holiday fizzle helps make mobile a dominating subject in payments talk this Marc RapportMobile’s surge into payments drew lots of attention in 2014, headlined late in the year by Apple Pay. The rumors, announcement, and launch of the mobile payments play gave us all something to write about.At, our longtime forte, of course, is examining how a credit union does something well and then sharing with other credit unions actionable advice on how to do the same. We also bring to you what we learned at industry trade shows and other gatherings.Here’s my choice for the top nine pieces on payments we wrote this past year.9. Wescom Powers P2P With PayPalOur researcher/writer Erik Payne examined the PayPal-powered person-to-person offering at Wescom Credit Union ($2.5B, Pasadena, Calif.) and found that the familiar service was an effective option for adoption by members as a mobile offering. Now in place for three years, the app has been used to send money approximately 6,000 times so far this year. Not huge numbers for a credit union that size, but Wescom says it’s a good way to position its services for the future as more members expect to transact through that channel.8. The Mighty Mobile OpportunityErik Payne also examined how three big credit unions — Kinecta ($3.5B, Manhattan Beach, CA), Workers’ ($1.1B Fitchburg, MA), and America First ($6.3B, Ogden, UT) — are using mobile wallets, loan applications, and location-based offers to expand the user experience in one small device. These devices have changed the way the public banks and have introduced a wider set of uses that are growing by the day. Here are three evolving capabilities that credit unions should consider right now — mobile payments, mobile loan applications, and location-based offers — as well as an exploration of their benefits for members and the cooperative. continue reading »last_img read more

How to save $100K by the time you’re 30

first_img 21SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr by: Amanda Reaume, Credit.comYou might have heard an absurd-sounding parable that often makes the rounds on personal finance blogs. This story is about two siblings who want to have a comfortable retirement — let’s make them sisters for this article’s purposes.The first sister starts saving in her 20s and manages to save $100,000 by the time she turns 30, but then never puts another dollar towards her retirement. The second sister waits until she’s 30 in order to start saving for retirement and then puts away $10,000 every year until she turns 65.The story is meant to showcase the power of compound interest and saving early for retirement.It sounds pretty incredulous but the math works out. If you assume the sisters invest at a 7% rate of return, the younger sister is going to have $1,150,615.18 when she retires while the older sister will have $1,065,601.21.It’s a nice story. continue reading »last_img read more

What does pizza have to do with credit unions?

first_imgby: Preston PackerDo you remember the Domino’s Pizza commercial series from the late 1980’s – “Avoid The Noid”. Clad in a red, skin-tight, rabbit-eared body suit with a black N inscribed in a white circle, The Noid was a physical manifestation of all the challenges (becoming annoyed – “a – noid”) inherent in getting a pizza delivered in under 30 minutes.If you are a fan of those commercials or of Domino’s, you might be surprised to learn that today the fastest growing domestic pizza company is not Domino’s but Papa John’s. Why? Simple, mobile. Thirteen years ago Papa John’s built digital infrastructure that has led to their being the market leader in mobile pizza orders. Today, mobile orders at Papa John’s represent 50% of total sales and 60% of all delivery sales. Second place in digital ordering goes to…. Domino’s, do you think they are a little “a – noid”? continue reading » 6SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img read more

Prepaid gains momentum among unbanked

first_imgPrepaid cards adoption continues to escalate among American consumers. In fact, a new Pew Charitable Trusts study found more than 20 million U.S. consumers use prepaid cards regularly. The report, “Banking on Prepaid,” examined 587 consumers’ knowledge, attitudes and perception of prepaid cards.The findings reflect a 50-percent increase in prepaid card usage between 2012 and 2014. While adoption of the products by those with traditional bank accounts has increased, consumers who fall into the unbanked category are driving the industry. Consumers in this increasingly coveted segment often use prepaid cards much as they would a traditional checking account: checking their balances more regularly, reloading more frequently and registering their cards more often than banked prepaid cardholders.Among the unbanked population, prepaid cards also offer a budgeting tool. Because most have annual household incomes below $50,000 (and one-third below $15,000), they tend to use the cards as a way to help control spending, stay out of debt and avoid overdraft fees. continue reading » 32SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img read more

Fincher, Posey and Heck urge NCUA to do RBC2 study

first_img 11SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr Reps. Stephen Fincher, R-Tenn., Bill Posey, R-Fla., and Denny Heck, D-Wash., on Tuesday urged NCUA to voluntarily undertake the risk-based capital study called for in their committee-approved bill, H.R. 2769, before moving ahead with finalizing RBC2.The bipartisan H.R. 2769 was overwhelmingly approved by the House Financial Services Committee in a 50-9 vote last week.The NAFCU-backed legislation would require NCUA to review its RBC2 proposal and report back to Congress on the agency’s authority to issue a two-tier, risk-based capital rule and the impact it would have on credit unions and their members.“A strong bipartisan majority of the House Financial Services Committee agrees with this sentiment, as the bill was passed by the Committee last week by an overwhelming majority of 50-9,” the lawmakers wrote. “In light of the Committee’s recent bipartisan advancement of this important legislation, we encourage you to voluntarily undertake the study outlined in our bill, and communicate your findings and recommendations to Congress, before moving forward and finalizing the risk-based capital proposal.” continue reading »last_img read more

13 worst things to do with your tax refund

first_img 11SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr People typically don’t want to pay more taxes than they need to, but a tax refund implies just that. Withholding more money than necessary each paycheck means that an individual forgoes the opportunity to earn interest on that money elsewhere. Approximately 77 percent of taxpayers receive a tax refund, according to the IRS.Furthermore, some of the most popular ways to spend tax refund money can easily turn into some of the biggest tax refund mistakes. A recent GOBankingRates survey revealed several popular uses for tax refunds that can boost your financial well being, or work against it. Click through for 13 of the worst ways to spend your hard-earned tax refund check.1. Pay Down Credit Card DebtUsing a tax refund check to pay off debt is the most popular way to spend a tax refund, as 27 percent of respondents plan to do so, according to the GOBankingRates survey. “The goal in spending a tax refund should be long-term financial security,” said Tim Gagnon, a professor of accounting at Northeastern University’s D’Amore-McKim School of Business.“Just reducing [a credit] card balance to run it back up does no good,” he said. Eliminating a credit card completely, paying off a high-interest loan and avoiding another similar debt is, however, evidence that your spending habits are under control. continue reading »last_img read more

How does your skip coverage measure up?

first_imgManaging risk is both an art form and a science. Understandably, many auto lenders fear making the wrong collateral protection insurance choice. Although charge-offs at U.S. banks decreased 0.28 percent from fourth quarter 2014 to second quarter 2015, a loss is a loss and the goal of all lenders is to keep repossessions as low as possible and minimize risk to the best of their ability.With CPI, skip coverage is one of those perceived risk mitigation tools. It protects lenders when borrowers are unable to pay on their loans and/or keep up with their state obligation to pay auto insurance premiums. However, not all skip coverage is created equal.A proficient provider of this vital auto lending risk management component will be armed with tools and resources to give your credit union the best opportunity to recover its collateral and maximize the return on its investment. This could include:a vast network of reliable partners that gives your credit union access to volume-based rates that can save you money and help you achieve the highest return on your assets. continue reading » 4SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img read more

Wells Fargo opened a couple million fake accounts

first_img 113SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblr Two basic principles of management, and regulation, and life, are:You get what you measure.The thing that you measure will get gamed.Really that’s just one principle: You get what you measure, but only exactly what you measure. There’s no guarantee that you’ll get the more general good thing that you thought you were approximately measuring. If you want hard workers and measure hours worked, you’ll get a lot of workers surfing the internet until midnight. If you want low banking bonuses and measure bonus-to-base-salary ratios, you’ll get high base salaries. Measurement is sort of an evil genie: It grants your wishes, but it takes them just a bit too literally.Anyway, yesterday Wells Fargo was fined $185 million by various regulators for opening customer accounts without the customers’ permission, and that is bad, but there is also something almost heroic about it. There’s a standard story in most bank scandals, in which small groups of highly paid traders gleefully and ungrammatically conspire to rip-off customers and make a lot of money for themselves and their bank. This isn’t that. This looks more like a vast uprising of low-paid and ill-treated Wells Fargo employees against their bosses. The Consumer Financial Protection Bureau, which fined Wells Fargo $100 million, reports that about 5,300 employees have been fired for signing customers up for fake accounts since 2011. Five thousand three hundred employees! You’d have a tough time organizing 5,300 people into a conspiracy, which makes me think that this was less a conspiracy and more a spontaneous revolt. The Los Angeles City Attorney, which got $50 million (the Office of the Comptroller of the Currency got the other $35 million), explained the employees’ grievances in a complaint last year: continue reading »last_img read more