It’s fall, which means most of us are waist deep in budget and strategic planning discussions. It wouldn’t surprise me if loan growth is one of your top priorities in 2020 (as usual).
According to Callahan and Associates, loan-to-share ratio in Q2 was the second highest Q2 on record. Loan growth, while still positive, has dropped to 6.5% industry wide — down 3.2 percentage points from 12 months ago.
The vast majority of our credit union partners are trying to figure out ways to drive loan growth. If you’re also wrestling with this dilemma, here are four ideas you might consider:
1. Design loan products with your member at the center. Do traditional loans fit the needs of all your members? You may need to dig deep into the journey of your members to really understand what they need. For example, some credit unions have created loan products with terms that are more conducive to their members’ lifestyle. Some mimic a car lease, some cater to gig workers, and others appeal to members who want to build short-term savings.
Try to unlock the needs of your members. About 80 percent of Americans carry some form of debt, and your members are probably similar. So how might you create favorable terms that inspire them to increase your share of wallet? Could you offer discounted rates for “bundling” multiple products? Could you reduce friction by simplifying the process for paying multiple debts?
2. Minimize risk. Credit unions have generally always been wise lenders, but there are other ways to minimize risk. Make financial counselors available, either through partnering with a nonprofit organization and/or training internal staff. Establishing one-on-one connections may enable you to “save” members who are teetering on the edge of a personal financial crisis.
Maybe they just need budgeting assistance on how to make ends meet. Maybe they need education on how to increase their credit score. Or maybe they need a debt management program to pay down debt. Helping members make wise borrowing decisions can pay off in long-term loyalty. And financially healthy members are generally good for your bottom line.
3. Make the lending experience memorable (in a good way). I suspect you have already used technology to streamline the application/signature/funding process. But what if you could take that experience to another level?
If the loan is for something significant like a home or car, perhaps you can show appreciation in a different way that the member will always remember. What if a new car came with coupons for car detailing, car washes or oil changes for 6 months? What if a mortgage came with a personalized doormat or something else for the home? What if a home improvement loan came with a gift certificate to a home improvement store? You get the idea. Be creative!
4. Explore ways you can use your core processing system to connect with members. For example, when your system recognizes an auto-pay to Ford Motor Credit, can you send a subtle messaging about lower auto interest rates? If you see a credit card payment to Chase, can you send a text message offering savings through a balance transfer?
Some of these ideas are lighter lifts than others. Whichever ideas you decide to pursue, good things will happen if you focus your 2020 vision on the needs of your members.