Never Say Quit

Grassroots connectivity gives credit unions a more nimble response to changing consumer preferences.

 
 

For the first time in many months, it feels good to be a consumer again. Consumerreports.org’s Consumer Sentiment Index reached 50.3 this month, reflecting the most positive consumer sentiments since the index was created in 2008.

And as confidence booms, borrowing bounces back, but not always in traditional channels. Credit unions that have bobbed and weaved through wavering demand in the recession have learned this lesson well; local lending strategies must be as maneuverable as the consumer sentiments that support them.

For instance, credit card debt outstanding fell by $4.2 billion to $795.5 billion in January, its lowest level in over six years, reports the New York Times. Yet opportunities can arise in the micro-marketplace. Credit unions grew their card portfolio in both the number of accounts (to $13.4 million) and the balances outstanding (to $36.9 billion).

Some are seeing such high demand for cards in their specific grassroots markets they are considering buying back card portfolios.

Institutions that displayed local responsiveness early on are now ahead of the recovery curve, but even some traditional markets are bouncing back, lessening the pressure on more standard lending models.

Credit unions originated a record $69 billion in loans last quarter by knowing what works in their specific markets, with their specific borrowers. Whether it’s consumer lending, used autos, or home equity, various institutions have found their own unique opportunities within shifting consumer sentiments. This localized connection to micro markets remains not just a cooperative priority for lending, but the difference that distinguishes credit unions from for-profit peers.

December’s University of Michigan American Customer Satisfaction Index report gave credit unions a score of 80 out of 100, down from an 84 the two years prior. The Index’s managing director told therepublic.com, “while credit unions generally survived the 2008 financial crisis much better than the banks, we are learning now they weren't completely immune to it."

Yes, yesterday’s setbacks have garnered ongoing lessons and areas of improvement. But as active local institutions stabilize and prepare to redistribute a net income level three times that of 2009 to their membership, a revitalization of member value and effective member communication is sure to follow in the New Year.

 
 

March 14, 2011


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