There’s an old business adage that “it’s much more cost-effective to retain your current customers than it is to acquire new ones.” Although that applies to most industries, it’s particularly apropos to credit unions, whose members are not only the lifeblood of the organization, but also its collective owners.
However, membership in a credit union does not automatically mean members will rely solely on that institution for all of their financial needs. In fact, members may not be fully aware of all their credit unions have to offer. Proactive customer retention— or, rather, cultivation — therefore becomes a crucial consideration. Thankfully, technology has advanced to the point that progressive, forward-looking credit unions can now leverage a wealth of data and analytics to expand their relationships with existing members.
By partnering with a capable provider that can offer access to comprehensive public records and mortgage databases, credit unions can easily identify new opportunities among its membership base. Information regarding current mortgages, interest rates, owner occupancy, and estimated loan-to-value can identify members whose first mortgages may be with another institution, but who would be excellent candidates for refinancing with the credit union.
Similarly, the credit union would be able to identify members among its current first mortgage portfolio who would be eligible for a home equity line of credit. Access to the appropriate data on a current mortgage holder can reveal estimated LTV, length of homeownership and — importantly — the presence of an existing subordinate loan (if any) held by another institution to help you identify and/or eliminate specific members to target.
Having a near 70-day lead time, coupled with a pre-existing membership relationship, can make a significant difference in holding on to a member’s mortgage business.
In fact, technology exists today that can provide credit unions with unprecedented advance warning that a current member’s mortgage business — whether first or second lien — may be at risk of being lost. Credit unions can now proactively monitor their portfolios to identify members with either a first or second mortgage with the cooperative who have listed their home for sale.
In the vast majority of cases, such a listing will correlate to a new home purchase (ideally within the credit union’s area of operations). Through this proactive monitoring, the credit union will be alerted as soon as a property in its portfolio is listed on a Multiple Listing Service. On average, this gives the credit union about 70 days’ advance notice of a potential loss of business — ample time to reach out proactively to that member and provide a compelling reason to stay with the credit union.
This capability has never existed before. Progressive credit unions now have the ability to maintain constant, ongoing, proactive monitoring of their portfolio, and to be notified as soon as a member’s property is listed for sale.
Consider the fact that customer retention levels for purchase mortgages industry-wide are only about 18%. Having a near 70-day lead time, coupled with a pre-existing membership relationship, can make a significant difference in holding on to a member’s mortgage business. Gaining first- mortgage business from a member who currently holds only a second lien with the credit union is an added opportunity.
There are a number of other ways that intelligent use of data, analytics, and technology can benefit the mortgage activities of forward-looking credit unions. Credit union leaders who identify and partner with trusted providers like Black Knight Financial Services, who have the resources, experience, and — of course — the data to help them make the most of the options available can gain a strategic advantage in the marketplace.
For more information on how Black Knight’s property, MLS and mortgage performance data and analytics can help you increase your knowledge of your existing member base or generate more real estate loans, contact us at DataAnalyticsInfo@bkfs.com or visit our website at www.BlackKnightDNA.com.
By Robert Walker
Managing Director, Black Knight Financial Services Data & Analytics, Real Estate Products and Analytics