Is the Competition Back?

Industry leaders offer four strategies credit unions can use to protect the progress they made this year in lending.

 
Callahan & Associates

By Callahan & Associates

 

Automotive lending is showing strong promise for credit unions in 2010. According to the January’s automobile sales figures, volume is on track for 10 million new car sales in 2010, the same or slightly more than were sold in 2009. Credit unions have made strong progress in automotive lending with credit union market share for auto lending topping 22% during 2009, according to Callahan & Associates’ 4Q 2009 Trendwatch.  But with opportunity comes competition, and banks and the captives are back in the market. In fact, some financial institutions are using rates as low as 2.99% and increased reserve payments to buy back market share. So, what can credit unions do to capitalize on the upswing in lending opportunities and maintain the strong market share growth? According to Callahan, “competition is re-emerging in auto lending, mortgage, and small business lending. Consistency is the key for credit unions.” Teres would take it one step further and say being pro-active is important given the reemergence of competition.

Tim Kelly, chief executive officer of Teres Solutions, spoke to Pierre Cardenas, senior vice president of retail at Amplify Federal Credit Union ($536.5M, Austin, TX), and David Lindsey, chief operating officer at Denver-based Aimbridge Indirect Lending, for input on what credit unions can do now to capitalize on opportunities and maintain their competitive position.

Here is a look into their recommendations (Download the Full Report Now).

Create a Solid Recapture Program for Your Credit Union
Credit unions need to be pro-active in going after lending opportunities, so it is important to establish or buildup an outbound calling program. Identify members who qualify for additional products and services, especially those with auto refinance opportunities. Provide the proper automation and information to your lenders and personnel, and then reach out with a phone call. Smart credit unions take every opportunity to recapture a loan that might go to a competitor.

Provide Online Shopping Portals for Members and Online Applications
There is a shortage of used automobiles, but credit unions can play a key role in making existing inventory available to member shoppers. Reach out to the 95% of consumers who research automobiles online before they purchase by providing an aggregated dealer inventory through a website. There, members can identify autos of interest and the credit union can provide value-added services, such as car information and accident details. For many buyers, online applications are the channel of choice.  For greater usage of online applications, incentivize your channel. It is the most efficient lending channel you have, and it is important to entice and reward your members for using it.

Offer Financing for Reputable Independent Dealers
Franchise dealers that had their contracts cancelled by automobile makers must now operate as independent dealers. Historically, there has been some caution in providing lending to these dealers. But, there are many reputable independent dealers who provide a base of customers that offer high yield lending opportunities. There is an opportunity here for credit unions to maximize their relationships and use their strict verification and validation processes to determine suitable partners.  Read more about the verification process in Teres’ detailed report (below).

Create a New Lending Channel: Merchant Lending
Aside from automotive lending, credit unions can take advantage of merchant lending opportunities. More merchants want to provide their customers with better service and offer instant financing at the point of sale. Credit unions can provide a financing option and loan applications around the clock, thereby enabling local businesses that offer consumer home improvement services, appliances, lifestyle purchases, and other goods and services the ability to finance purchases with automated, instant approvals.  Through a merchant lending offering, credit unions can increase their membership base, cross-sell additional products, assume a greater role in the local economy, and foster relationships with local businesses.

For more details on how to incorporate each of these pro-active strategies, download Is the Competition Back? Protect the Progress You Made in Lending Last Year. Teres’ complimentary report is a great tool for success in 2010 and beyond.

Teres, A CRIF Company, based in Austin, TX (USA), provides direct, indirect, and merchant lending software products that define the state-of-the-art for the financial institution market.
The Teres direct, indirect, and merchant lending products allow financial institutions to streamline lending decisions, increase revenue through enhanced loan application processing efficiency, improve dealer and member relations, and augment loan tracking and reporting capabilities.

 
 

April 19, 2010


Comments

 
 
 
  • Another way of being pro-active is by offering your members a CARFAX Vehicle History Report. Offering the report helps the credit union identify members in the market for an auto loan. I've seen many credit unions providing the report at a significant discount from the 34.99 consumer price, thus offering a great member benefit and protecting themselves and the member from a bad vehicle.
    Anonymous