Leaders in Lending: Insights and Perspectives for CU Growth
By Paul Timm, Vice President, Marketing & Strategic Development | NAFCU Services
At this point, most of us have a podcast queue stacked with good intentions and too many new episodes. But when it comes to making time for work-related content, there’s one place I’ve been picking up lots of gems lately. The business of credit union lending is obviously going through some major shifts this year. I’ve been following Jeff Keltner’s “Leaders In Lending” podcast, which is packed with keen insights from some of the industry’s brightest thinkers. Jeff is the SVP of Business Development for Upstart, and every week he sits down (stands actually) with senior leaders in financial services to discuss their perspectives on the economy, trends in consumer lending, evolving member preferences, and so much more.
Here are some recent highlights from credit union leaders on how to best serve member needs and grow loans in 2022 and beyond.
Through Trusted Partnerships, Credit Unions Can Gain an Even Bigger Edge
Dan Berger, NAFCU’s President and CEO, recently framed the industry imperative this way: “We do three things here. We help credit unions grow, grow, and grow”. He explained that even though the term “fintech” has become a bit overused in places, credit unions must vet and partner with good fintechs to help them advance the member experience. American consumers still have an exceptional affinity for and trust in their credit unions. When credit unions bring useful new tech to the market, it comes with that extra layer of much-needed confidence. Dan asserted, “I bet you 98% of those [fintech startups] will end up going away, but credit unions will still be there”. Hear the full conversation with Dan and Jeff here.
Find Partners that Align with Member Needs
“There’s a tendency to look at lending as a product. Financial institutions really look at lending with their bottom-line in mind. Certainly, at Alliant, we take a very different approach” reported Charles Krawitz, Senior Vice President, Chief Capital Markets Officer, and Head of Commercial Lending. “Lending is really seen as a means of supporting our members and aligning with their needs. It’s all about the membership and their aspirations and objectives and keeping their needs at the forefront. We try to find lendtech partners that are capable of fulfilling those needs to a greater extent and helping us with a product set that is transparent, that allows for easy price comparison, and that benefits our members’ financial journey, as opposed to this mentality of needing to benefit our institution’s bottom line.” Check out the full episode with Charles.
Tap into the Auto Refi Market Opportunity
Jay Fee, the VP of Consumer Lending at PenFed Credit Union noted the opportunities in the auto market. “With auto refinance, FIs are dependent upon the fintechs. We estimated the full TAM to be a trillion-dollar market. At a certain point, if everything were out there...somewhere around 100 billion would be refinanced every month. So, there’s still some room to grow in the [auto refinance] market.” Hear more on that here.
Make Business Decisions, Not Credit Decisions
“Make business decisions and not credit decisions” was a key point from Rick Jarrar, Chief Lending Officer at Kemba Financial Credit Union. “This is something that I often work with my people on just because we have this matrix of credit guidelines between a FICO and a DTI. This is not the world that our members live in. There’s a million other things that come into play when you make a decision or credit decision. The first thing I always tell them is, don’t ever come to me and say, ‘I’ve got a 600 member, or I’ve got a 750 application.’ This is not the way to make credit decisions or evaluate whether you make a loan. Look at the totality of the situation – understand the profile of the applicant and make a business decision, not just a credit decision.” Check out the full episode here.
Focus on Service, Not Process
David Brand, SVP of Lending Operations at Sharonview FCU, reminded us to always flip the focus to member needs and service, remembering that’s why processes exist in the first place. “Really put a focus on the employee and customer experience, and then develop your processes around that. I’ve worked at a lot of organizations where they say, ‘Well, this is our process. So, we have to make sure we tell our customers about our processes, whether they like it or not.’ Well, that doesn’t always work out so well. So, I call it service-oriented process, as opposed to process-oriented service. We say, ‘what is the best way to deliver this product or service that ensures the least amount of friction, not only for our employees but for the end consumer as well?’” Catch more from David and Jeff here.
Relationships Need Innovation Too
Finally, Firstmark Credit Union’s CEO, Nathanael Tarwasokono, put some much-needed emphasis on new ways to enhance member relationships along the way. “I think a lot of the transactions that happen online are truly transactional in nature. And what happens on the phone, or in a branch, is more relational in nature. So, when people call in, or they talk to someone in our branch, they truly want advice. So, for example, when people used to come into a credit union branch, they would come in, cash a check, withdraw cash, [it’s] very transactional in nature. Now, you can do all of that online. Most of the time when people come in now, they truly want some advice. So, an example I’ll share with you is, all of our branch employees are being trained to become certified financial coaches. Our employees’ skill set needs to move from cashing checks to being able to coach a member on how to create a budget, how to start saving for retirement, those types of things. So, transactional online but relational in person.” Nathanael had so much to say on this issue – catch the full episode.
It’s anybody’s guess what the market for loans will look like in the coming months. But these six experts are already thinking about how their strategies, tactics, people, and technology need to shift with the economy and consumer needs. You can always follow us here to keep up with the latest developments. Or join Jeff Keltner and his Leaders In Lending team for their next conversation here.