Make the Green Revolution Work for Your Credit Union

by: Tom Kazar, VP Sales, Transamerica Financial Solutions Group

“Green loans” are a win for everyone

Now that “going green” is becoming the rule rather than the exception for many consumers, why not benefit from this fast-growing mindset? A simple way to help support the environmental movement and the local economy—and stimulate your financial institution’s bottom line—is to promote special rates on loans for ecologically beneficial measures. Home improvement projects that demonstrate energy efficiency and sustainability are excellent candidates for such loans.

For example, a credit union in northern Maine offers lower interest rates on loans for projects ranging from beefed up insulation to the installation of windmills to help power homes. Financial institutions operating in climates with less severe winters could promote discounted loans for purchasing solar panels for home energy and Energy Star appliances. Replacing drafty old windows with new, energy-efficient models is a worthwhile investment that can benefit consumers virtually anywhere, not to mention improve resale value for homeowners.

A raft of newer home improvement products—from zero VOC paints to recycled countertops and carpet and many others—are getting a great deal of attention in shelter magazines and popular home and garden television programs, spurring consumer demand throughout the country. And there is no need to stop at home improvement-type projects. The growing availability and popularity of hybrid vehicles represents another avenue for providing discounted loans.

Keep it simple

Starting a green loans program is not complicated. Rather than doing a risk-based rate of interest, the credit union we cited in Maine offers a fixed, lower rate on green loans for a set period of time—perhaps two years at five percent instead of 8.99 or 9 percent.

Rather than require consumers to fill out reams of paperwork, your lending officers can ascertain whether a given project meets the “green” standard based on purchase orders, plans and even checks made out to providers who have been approved for your program. The benefits here are twofold: your financial institution avoids inundating employees with extra work, and—perhaps even more important—you demonstrate a commitment to partnering with small business owners in your community.

Don’t sacrifice profitability

While offering lower interest rates for green projects and purchases may not seem like a recipe for growth, your financial institution can offset the lower rates by increasing loan volume via green loans, and by aggressively promoting payment protection on each loan.

The key to implementing a profitable green loans program is to promote the new initiative in as many ways as you can. In addition to adding the green loans information to your advertising program, make use of lower cost venues such as your website and social media like Facebook and Twitter. Prominent posters at each branch and statement stuffers will also help to get the word out.

Again, the importance of community building cannot be overstated. Local initiatives represent an opportunity to forge lasting relationships in your area in a way that would be difficult for the mega banks to replicate. Therefore, when selecting local contractors, building suppliers and auto dealers with whom to partner, be sure to obtain their buy-in as far as marketing measures. By employing the same promotional tactics—posters, social media, website announcements and the like—your community partners will significantly increase the public awareness of your new green loans program. So, go ahead: Go green!

Tom Kazar is the Vice President of Sales at Transamerica Financial Solutions Group.  Transamerica and its affiliated companies offer a wide array of innovative financial services and products with a common purpose:  to help individuals, families, and businesses build, protect and preserve their hard-earned assets.  With a portfolio that includes traditional insurance and membership products, life and disability, credit and mortgage insurance, debt cancellation, reinsurance solutions and related products; Transamerica can tailor offerings that strengthen your organization while protecting member obligations.  For more information about Transamerica, visit www.TransamericaFinancialSolutions.com.