Andy Gilbert once said, “You can’t catch the big fish by skimming the surface.” And, if your credit union isn’t evolving and offering products customers need, their first inclination might be to walk away thinking, “That stinks. My bank offers more.” However, with simple fixes to your alternative lending products, your customers might be saying, “That’s the loan we need.” And, “Honey, break out the bubbly. We’re back in business!”
To reel the big and little ones in, (enough fishing puns already), you need to develop deeper relationships with customers, i.e., strategic planning that targets your membership base and their specific needs. So how do you get started?
Credit unions with effective lending strategies start by identifying opportunities in sales and services. Hence, you become more efficient + solve problems. Furthermore, your new lending strategies give you a competitive lead over big banks. How? You’re filling gaps in the customer journey that they can’t. And, that’s important.
Consumers can be fickle – blame it on the Amazon Effect. They want everything now and demand is ever-changing. However, your new indirect business loan strategies will keep you ahead of the curve with opportunities for new and existing members. Insert feel-good emoticons here.
Target Niche Needs: Provide Small, Short-Term Lending
Most traditional loan products revolve around deposits, multiple locations and different types of loan programs. But, if your loan options are outdated, they may not address the needs of every member. And, you might not be attracting new members like students, millennials, small business owners and immigrants. Maybe they’re looking for micro/small loans, smaller auto loans or payday loans. And, you can fix this so get the coffee ready.
While you can’t be all things to every member, aligning your focus is crucial so your brand can resonate with members. Some credit unions offer payday loans based on specific behaviors like if applicants have been long-standing members. Hence, offering short-term and smaller loans to existing and new members let you reach customers in need of microloans. These can be for things like small home or auto emergency repairs or to pay for books for their or their children’s education.
When setting up microloans, consider offering discounts or waiving fees for setting up direct deposit. Remember, automating processes is easier for members to repay loans and for credit unions to recoup funds. Next!
Have Everything Under One Roof: Offer Alternative Loan Packages
To target more services to business loan customers, help them transfer all their accounts to your credit union. For example, members might have their auto loans with one bank and credit cards elsewhere. Or, a business might have staff that they want to send for on-the-job training. These are ideal candidates for alternative loan packages and other loan services.
Aside from getting them to switch their savings and checking accounts and home and auto loans to your credit union, think outside the box. Consider debt refinancing loans and job skills education loans. And, now for the tricky, err, strategic part.
Explore the local businesses in your area and map out the different types of loan packages they can benefit from. Examples include loans for training and certification courses, technical education coursework and consolidating debts and credit card bills.
Incidentally, loans like these can be looked at as supplemental pay for members as the loan is deferred during their training or coursework. These types of loans can be offered in packages with grants from The Community Development Financial Institutions Program (CDFI). They match federal resources with private funds to help underserved and low-income populations. They originated over $21.5 million in loans and helped over 19,000 businesses. It’s a win-win for your credit union because you’re helping to serve those in your communities.
Ready for one more?
Increase Credit Limits and Move Through Loan Processes Faster
Not every bank offers credit limit increases and customers might not want to request them concerned these will be hard inquiries on their credit reports. However, it’s a specific market niche you might want to address to grow prospects and increase members.
Research your customers’ debt-to-income ratios and propensity to spend. Another option is to offer seasonal promotions. While larger loans are traditionally used to expand operations, purchase new equipment and increase available capital, this is another area where microloans might be a good fit. Business owners might want to take out a new loan to cover any losses during tax season or to buy smaller pieces of office equipment. But, don’t stop there.
For those that want personal loans, consumers usually take out loans around the holidays for travel and gifts. They also might apply for loans in the spring for home renovations or in the fall for back to school sales. These are all opportunities for you to meet a specific need.
Last and certainly not least, you’ll want to speed up the loan process for new and existing members. Ask yourself, how current and up-to-date is your mobile app? If you’re still using a website that isn’t optimized for mobile, chances are it’s reducing your member conversions. What’s the adage? Out with the old and in with the new? Your online presence has to embrace and reach all demographics, age groups and mobile devices. Hence, your site needs to deliver or members will shop elsewhere.
Optimizing your app and letting potential and existing members apply for loans online are opportunities that help members on the purchase journey. You can provide fast answers about credit reports, your competitive and awesome interest rates and your different loan packages. You’re also providing transparency in lending and helping consumers make confident business decisions (from the comforts of their smartphones). Hence, your loan origination software can help you reach wider target audiences.
Create Strategic Opportunities for Members
The bottom line is that growth is possible for credit unions of all sizes as you don’t want to just survive but thrive. To fuel members, you need to stay competitive in the indirect and alternative lending markets. And, one of the best ways to target indirect lending is by knowing and helping to meet the needs of your customers.
Because every market will have different needs, you might have to adopt approaches that differ from other credit unions (lifestyle loans, education loans, optimizing across mobile devices). However, by leveraging available loan options and your site features, you can gain market share by meeting niche needs (that big banks can’t). These are all steps to help you fish deeper (more targeted, more specific) to meet the needs of your customers and strategically allocate your resources for future growth.
For additional insights into effective indirect lending strategies, explore Sync 1 Systems.
About Sync1 Systems
Sync1 Systems is an Austin-based Fintech CUSO providing a new generation of digital banking solutions that includes a sophisticated loan origination system, internet banking and account opening solution designed specifically for credit unions.
As a CUSO, Sync1Systems, understands the challenges that Credit Unions face every day. Our agile, highly configurable, cloud-based system allows you to focus on the needs of your member.
For more information about Sync1Systems:
contact: Steve Maloney CEO: Steve@sync1systems.com 1-512-646-0997