100 million members! Now what?
Q&A with Dan Kaiser, Senior Vice President, Lending & Payment Security, CUNA Mutual Group
Q: Why are credit unions so good at signing up new members, but then not capturing wallet share from those new members? Is there a flaw in the process? Training? Culture?
A: As credit unions look to grow, indirect lending continues to be a valuable product to build new membership. While increased use of indirect lending as a strategic lever to grow loans can bring positive business results, it tends to produce softer relationships between member and credit union.
A member who has an indirect loan may not have the same affinity as a traditional member, increasing the marketing costs to expand this relationship beyond the indirect loan. As a credit union looks at its strategic portfolio of member wallet share, the challenge or opportunity will be how to expand the indirect lending relationship over the next several years.
In addition, the digital and mobile revolution in the financial industry has weakened an institution’s ability to be recognized as a consumer’s primary financial institution. Historically, consumers would choose where to keep their checking and savings account, and then rely on that same institution for other financial/insurance products and services.
In the digital age, more competition and options provide consumers with the ability to spread their financial services and investments, letting rates and the best experience win their business over pre-established relationships and familiarity. Credit unions are not immune to this trend, and must continue to compete not only on service but also on product and technology innovation to attract the younger demographic.
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