Tuesday, July 15, 2014

Time to Rethink How Your Credit Union Grows its Mortgage Volume?

We always like when we can share good news with our credit union readers. A recent report from Inside Mortgage Finance shows that approximately $310 billion in mortgages were reported for the second quarter of 2014. That’s an impressive 32% increase.

There are numerous possible reasons for this increase: the Fed’s bond-buying program that’s helped to push mortgage rates to historic lows; the harsh winter delayed many homebuyers from actively searching and the current warmer weather is bringing them out; and the slowly improving economy and job market.   

Chances are your credit union has noticed an upswing in its mortgages. We advise that instead of waiting for the loans to roll in, now is the time – more than ever – to get proactive in growing your credit union’s mortgage volume.

Mortgages were already top-of-mind for many credit unions for 2014. In the Financial Brand’s annual “State of Marketing in Retail Banking” study, 67.3% of responding financial institutions ranked mortgage loans/refinancing as their second most important strategic goal, mobile banking solutions took the number one slot. The study included 300 financial institutions, about half of which were credit unions. You can effectively kill two birds with one stone by combining mobile banking and mortgages. That leads us to our first tip ...

Growing Mortgage Volume

  1. Go Mobile
    Have a mobile app that not only lets members apply for a mortgage, but helps simplify their home search as well. Your members are getting more and more used to doing everything on their smartphones or tablets, and they’ll soon expect to be able to completely interact with your credit union that way.  Consider mobile capabilities that would let them electronically verify your receipt of their mortgage application, check their loan status and submit supporting documents if needed. Those financial institutions who can adapt to borrower behaviors the fastest will win.
  2. Enhance the Process
    You might think your credit union’s process is nearly perfect, but there’s always room for improvement. Take another look into streamlining your loan approval and disbursement process. Offer online and/or mobile applications. Or you could team up with a CUSO to facilitate the process. Mortgage Center in Michigan is one example of a full-service mortgage company that’s credit union-specific.
  3. Get Your Whole Credit Union Involved
    One of your credit union’s best marketing resources are its staff and members. Encourage them to bring in new mortgages with a referral reward program. Your tellers and loan officers are also your best advocates to grow loan volume, train them to cross-sell products at every touch point with your members. Also, position your credit union as “the” financial resource for your members and offer financial education/literacy classes, articles, calculators or other resources, linking them to your loan products.

  4. Promote with Innovation
    If your old marketing strategies could use some sprucing up, we’ve got a few ideas.

    • Websites like Zillow lets credit unions and banks advertise in their Mortgage Marketplace or co-market with local listing agents.
    • Use your big data and identify members with mortgages at other financial institutions who meet your loan/credit criteria so you can target them specifically. This approach will help you conserve your marketing dollars and free up staff for qualified borrowers.
    • Use word of mouth by holding a Facebook contest or other social media platforms to ask members to talk about their experience getting a mortgage at your credit union. This not only encourages online interaction and creates positive PR, it also gives you a bank of member testimonials that you can use in all aspects of your marketing campaigns.

  5. Be Prepared
    CUNA says credit union loan balances are expected to rise 9.6% in 2014 and 10% in 2015. When you consider that houses sell, on average, in about two months of being on the market, your credit union needs to be prepared to give borrowers the information they need immediately, anytime, anywhere. And keep in mind that most borrowers don’t consider PFI loyalty when shopping for a mortgage. Accenture found that only 40% of consumers took out a mortgage from their PRI last year.  

Finding new ways to grow your mortgage volume can seem a bit overwhelming at times. CU Solutions Group has loan growth experts, so feel free to contact us if you need assistance

Wednesday, July 9, 2014

Three Ways to Grow Your Credit Union’s Non-Interest Income

As a credit union, reconciling your not-for-profit, “people helping people” mission with the need to generate income can be tough. Unlike other financial institutions, hiking up fees or charging for once free services aren’t a credit union’s go-to solution when the need for additional non-interest income becomes apparent. So, what’s a member-friendly credit union to do? Get creative.

Comparing the 2012 and 2013 Non-Interest Income Surveys from Callahan & Associates show that overall, non-interest income is down for credit unions. Here are some numbers to consider:

  • NSF/courtesy pay income was the largest source of non-interest for credit unions in 2012. In 2013 it moved to second.
  • Non-interest income from debit card interchange and fees is now the largest contributor for credit unions – up to 23.8%, compared to 22.5% in 2012.
  • Miscellaneous non-interest income also grew from 4.5% in 2012 to 8.8% in 2013. Safety deposit boxes and skip-a-payment fees were the most common source of this income. 

Growing Non-Interest Income

Other sources of non-interest income on the survey included mortgage sales, credit card interchange and fees, investment and insurance sales, ATM fees and others. As with most issues credit unions need to contend with in this roller coaster economy, it may be time to get creative on sources of non-interest income. How creative is up to you. We have a few suggestions – some are just expanding on current efforts while others include adding something new to the mix:

  1. Become their PFI
    Easier said than done, right? But jockeying to become your members’ primary financial institution may not be as difficult as you think. There’s still plenty of backlash from the banking crisis a few years ago that many members would be happy to ditch their bank. They just need reasons to move, and a simple process to do so.

    Increased wallet share is basically the Holy Grail for credit unions, and sometimes less is more. If your credit union doesn’t offer free checking, it should. The more members you attract with fewer fees can exceed what you currently earn on your regular checking accounts.  Relationship discounts are also a popular way to attract more wallet share. Discounts on loans if members use their checking accounts to make payments is becoming more commonplace. Also, have an online (and in-branch) switch kit to help simplify the move for your members.

  2. Think Beyond Interchange
    As the survey says, debit card interchange and fees are the top source of non-interest income for credit unions. But there are other ways your credit union can take advantage of debit cards. Train your front line staff to promote debit card overdraft protection if you have it. If you don’t, you might want to consider adding it. Let your members know exactly how it works, what it costs and how it can help them. Chances are they’ll sign up.

    Offer instant-issue debit cards. A financial consulting firm discovered that credit unions/banks that offer instant-issue debit cards have a 15% higher activation on new accounts, 20% more swipes and new accountholders spend 20% more. Finally, if your credit union wants to benefit even more from debit card interchange and fees, then promote card acquisition and usage. Maybe offer incentives for increased usage. Once your members become comfortable using their credit union debit card, they’ll use it more often.

  3. Partner Up
    Sometimes all it takes to boost non-interest income is the right program or partner – or both! Many member rewards programs offer credit union incentives for active participation. This lets your credit union bring your members attractive discounts while generating non-interest income at the same time.

    With many programs you’ll need to weigh any initial outlay to potential earned income. With other programs, like our Love My Credit Union Rewards program, credit unions only need to promote the program to earn non-income incentives. We even offer free marketing materials and support to help accomplish this. Discount partners like Sprint and Credit Union Auto Club offer valuable incentives – while other big-name partners like GM, TurboTax and DIRECTV help attract your members to the program. It’s a good source of non-interest income for minimal effort – a total win-win for your credit union!
However your credit union chooses to grow its non-interest income, it’s vital to rethink how you do it. With more and more consumer/member scrutiny on fees and rates, it pays in the long run to have the reduced fees and comprehensive services that non-interest income can help bring.

Wednesday, July 2, 2014

Happy Independence Day, Credit Unions!

With Independence Day on the near horizon, we got to thinking about the parallels between the birth of our country to that of the credit union movement. The Declaration of Independence spells out our forefathers’ quest for equality, life, liberty and the pursuit of Happiness. Even though credit unions were first formed in Germany, not the U.S., they were formed with a cooperative spirit – just like they are today. Can you think of a larger “cooperative” entity than the United States? Hermann Schulze-Deitzsch created the first credit union in 1852 “based on the values of self-help, self-responsibility, democracy, equality, equity and solidarity.” Sound familiar?

Like our country, credit unions have had some growth and growing pains over the years. Once they finally came to the U.S. in 1908, the credit union movement had spread to Belgium, Italy, England, Austria, Switzerland, Hungary, the Netherlands, Canada and the Balkans. It seems like the credit union “people helping people” philosophy will never go out of style, no matter where you live. We all have one thing in common with our country’s founding fathers, the desire to have a say in what happens to our money, our livelihood. 

So, this Fourth of July take a moment to be proud that you’re an American and part of the cooperative spirit of credit unions. Happy Independence Day everyone!