A higher calling: The role of credit unions during a pandemic

There will be an end to the downward spiral of the economy! Yet, with that we will see the growth of a changed economy.  The question is – Will credit unions  be prepared to adapt to and be part of this change, or will they watch from the sidelines? 

According to LivingHistoryFarm.org during the depression, “…9,000 banks failed during the decade of the 30’s. It’s estimated that 4,000 banks failed during the one year of 1933 alone. By 1933, depositors saw $140 billion disappear through bank failures.”  Back then, banks were not part of the solution and, unfortunately, they failed. Today there are more opportunities for banks and credit unions to help, especially during this particular downturn. Thanks to incentives from the federal government (e.g. The Cares Act), lending institutions have great reasons to get involved. Moreover, these institutions have a higher purpose – sustainability.

As we progress through potentially one of the worst economic downturns in modern history, we have choices to make, both as consumers and lending institutions. Credit unions, in particular, have obligations to their communities that large banks do not. At this time of need, there is a call for financial help – who will step up? Do we pull back and wait until things get better, or do we help our credit union members come out on top?

Through the Dot Com crash, 9-11 and the “Too Big to Fail” banking crisis, companies that weathered the storm and doubled down on their marketing efforts came out stronger and with more market share than their competitors. According to the Low Income Investment Fund, those who came out on top during a downturn took “…the time needed to advise borrowers, restructure terms to best suit the situation, and postponed implementing legal recovery…to minimize balance sheet losses.” It turns out that hiding during the storm is not the best strategy.

This is the time to live up to our core values and respond with empathy and solutions!

Much of what is happening is out of our control. That being said, what we can control is how we prepare to respond to new market conditions and compete at the highest level. According to Ashwin Adarkar, Paul Hyde, Marukel Nunez Maxwell, and Abhilash Sridharan, “While it is clear that all banks will have to adapt capacity as the model adjusts, at least in the interim, the most thoughtful institutions are doing it strategically.” This idea of a “thoughtful institution” is already part of the credit union mantra, so it’s a good fit.

With rates at historical lows, dealerships with limited quantity of new and used cars, and houses sitting in a deserted market with no buyers – accessible lending is the only solution. We need to prepare to bring awareness to credit unions with a powerful message. The Credit Union National Association’s Open Your Eyes awareness campaign is a great example of a higher calling for “thoughtful institutions” and their role in such difficult times. But is it enough?

According to Jacob Passy from Market Watch, “Mortgage rates have fallen in 2020 thus far, mainly in response to concerns related to the economic impact of the COVID-19 outbreak that has spread around the world.”

The Best Awareness Comes from Product Awareness!

So, let’s thoughtfully prepare product promotions, best auto rates, home loan rates, and refi-rates to the benefit of small businesses and consumers, who will eventually need such products. Awareness is a byproduct of advertising, so let’s inform our members. With government support, this all becomes a higher calling as well as a sound strategy.

This is the time for credit unions to respond to market conditions and get the word out that credit unions are the best place to obtain the loan that fits your members’ needs. 

Do not wait and play catch-up to banks; get prepared to double-down on your marketing efforts. Take advantage of the extremely low rates to build your loan portfolio and membership base.

As a Credit Union Service Organization, it is our responsibility every day to make sure our credit unions have the most cost efficient integrations built into their Loan Origination System to insure an exceptional member experience.  

“Organizations with good alignment not only achieve 27% faster three-year profit growth, they also close 38% more deals.” – HubSpot

When Customer Service, Sales and Marketing are all aligned to the common goal of an exceptional user experience, profits will follow. This collaborative approach creates a more strategic, efficient marketing campaign that results in more deals, more revenue, and accelerated growth for your credit union. 

Positioning the Credit Union When There is Low Dealer Inventory

Exceptional user experience begins early in the process. Positioning the credit union as a source for information of news may affect the purchase. Create inbound and outbound product awareness to help the member make better decisions early in the buying process. For example, show the member the benefits of a lower rate with a direct loan from the credit union vs. dealer financing. Being preapproved for a loan or using a mobile integration from the credit union mobile app will give them the upper hand to move more expediently to avoid the dealer pressure and obtain the vehicle they want when dealer inventories are low. Providing content on trends in consumer lending can incentivize them to going online, going into the branch or using the mobile integration at the dealership to obtain a better loan and enhance their auto buying experience.

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