Using data to grow your auto loan portfolio

How well do you know your members? As a credit union, you have an enormous amount of insight and knowledge available at your fingertips to help your members secure their financial future. Tapping into that information and figuring out the best way to utilize it can be challenging. With a few simple actions, your credit union can wield substantial value for your members while improving member retention, satisfaction, and wallet share.

To successfully use this valuable data, specifically in your credit union’s loan growth strategy, you’ll need to figure out what you don’t already know about your members. Sounds simple, right? With a quick query of your membership data, you can break it down, analyze it, and figure out how to use it to increase your portfolio.

Here are some items to keep in mind when it comes to using your credit union’s data.

• What is the average relationship length for your members?

Is your credit union built upon lifelong members or have your members been acquired through significant indirect lending activity, leading to members who may move on when they refinance or pay off their vehicle? Once you know who makes up your member base and how long you serve them, you can set the stage for growing your loan portfolio by focusing on their specific needs.

• How many accounts do your members hold with your credit union?

Chances are, you may not be your members’ only financial institution. While you may hold a members’ share account and a savings account, and hopefully some type of loan or credit card, we all understand that today’s consumers are fickle, and not nearly as loyal as they once were. But that doesn’t mean that there isn’t opportunity to grow wallet share while bringing value to your member.

According to a Nerd Wallet survey of consumer debt, as of 2016, the average American household has over $135,000 in open balances across mortgage, vehicle loan, credit card, and student loan accounts. To bring this into perspective of where you may stand with your members, the first step you’ll need to take is identifying how many accounts on average each member or household has, and then look at the specific account type. From here, you can strategically focus on what products your members need and want.

• How do your members use their accounts?

It’s important to never forget about the “disappearing member.” With so many consumer options available when it comes to opening accounts, specifically online banking opportunities, members can easily open new accounts and move deposits and loans with a click of a mouse.

Have you identified actions that signify a member may be on their way out? Decreased debit or credit card transactions may be a sign that your member is conducting a majority of their business elsewhere. Likewise, significantly declining balances show that their deposits have possibly found another home. Credit unions must take action before that member becomes yet another one on your books with a zero account balance.

• What is the lifecycle of your members’ loans?

Take a look at how long your members keep their auto loans before paying off or refinancing their vehicle. Check out where payoff payments are coming from and if auto loan payoffs, mortgage refinances, or credit card balance transfers are clustered around significant activity from your competition to woo your members.

Once you get a handle on your existing members’ behaviors, you can develop a persona to match both your existing member as well as the member you hope to serve in the future. For example, after reviewing your available data, you may find that your existing average member has been with you for nine years, holds a share account, savings account, and an auto loan which he or she pays off within 27 months of origination. This allows you to reach out with a targeted campaign at intervals before their average payoff time occurs, leading them to start the car shopping process or researching lower interest rates to refinance. Staying top of mind during this “shopping” period allows your credit union the opportunity to retain that business and strengthen the relationship with your member.

Taking a deeper dive into the data that you already have allows your credit union to build stronger relationships, improve the member’s journey, and retain the members that already are familiar with your institution. At the same time, you are able to strategically focus on growing your auto loan portfolio by offering your members the services that they need.

Click here for more information on how to deliver pre-qualified auto loan campaigns to your members with SWBC’s AUTOPAY.