Credit unions have long had a key differentiator over other ﬁnancial service providers by offering deeper, relationship-based service to their members. In an ever-changing economy, that has been a stabilizer for credit unions and has made for good business.
One of the ways credit unions can offer members a portfolio of competitive services is through their own trusted relationship with specialized service providers. As with any market, there is bound to be change and acquisition activity that makes it important to go back to the basics of selecting and vetting these key partners.
Indeed, there is some indication of change in the air given recent acquisitions that muddy the waters between ﬁnancial service companies and providers that traditionally partner with credit unions. This short paper provides essential factors for evaluating partners to help leaders best serve members and ensure the institution can thrive in their core competencies.
Take for example the ability to provide residual based financing (RBF). RBF and leasing are not typically a core competency of a credit union, but it is an important offering in the product portfolio. The following are a few considerations when selecting an RBF partner or other synergistic service partner that can make for smart business.
Expertise, Stability, And Longevity
Does the company have deep, unique experience that enables a compelling service offering? Identify partners that have deep expertise on the speciﬁc aspect of ﬁnancing. Does the potential partner provide a culture of being service-oriented and credit union-oriented? Because credit unions have a unique relationship with members, every partner needs to understand the business, and focus on the essential ingredients to provide a positive member experience and smart ﬁnancial proposition for everyone.
Complementary To Your Business
Does your potential partner overlap with any of your core offerings? It is wise to seek synergistic partners that support indirect or other endeavors and that do not compete with your own direct relationships or dealer network.
Agile And Flexible
How ﬂexible is the partner to work with your style of business and expected member experience? Identify a partner that can take the credit union’s lead to form the right program. The right partner has account management personnel and dealer account management that assist your team and provide training in the ﬁeld.
It’s All About Innovation And Revenue-Producing Products
To offer low payment, balloon ﬁnancing to members takes the right type of partner. One that can help the institution do it well to ensure that it is smart, sustainable business for the credit union.
In a good partnership, when one company wins, the other company wins too. With acquisitions in the industry, it will be more important than ever to ensure that your partnerships are well aligned seeking the same goal.
The balance is being open to change while working with trusted partners to deliver innovative programs to customers. It can be important to vet partners to determine if they have any competitive offerings that conﬂict with the nature of your business.
Case Study: Credit Union Auto Finance
Credit Union Auto Finance (CUAF) is a credit union service organization based in Rochester, NY. The company services 250 auto dealers throughout New York and currently helps eight credit unions run their indirect programs. CUAF was looking for a way to compete with other leasing options. Find out how and why they selected their RBF partner.
Tim Kelly is president of Auto Financial Group and has more than 20 years’ experience delivering solutions to financial institutions.
Auto Financial Group (AFG), a Houston-based company, provides an online, residual based, walk-away vehicle ﬁnancing product called AFG Balloon Lending, as well as vehicle leasing and vehicle remarketing to ﬁnancial institutions across the United States. For more information about AFG call toll free at 877-354-4234, or visit www.autoﬁnancialgroup.com.