Ways to lower your loan-to-share ratio without scaling back on lending

According to recent data, roughly 1000 credit unions and 2000 banks have a loan-to-share ratio of 90% or higher.

Due to multiple market factors, many members are pulling their money out of traditional accounts in favor of investment alternatives that offer greater return.ii This decrease in deposit funds plus the steady demand for loans has led to a significant increase in the average loan-to-share ratio of credit unions. 

Rather than scaling back on lending or borrowing from higher-cost alternative funding sources, consider adopting the following strategies to increase deposit activity, decrease your loan-to-share ratio, and differentiate your business from other financial institutions.  

1. Enlist competitive programs to fuel deposit growth

Many financial institutions are not currently offering retail deposit options to their consumers.iii but these programs are worth considering. Commercial deposits, CDs, and other retail deposit programs can help your credit union to pull in members seeking these account types, while also building new streams of revenue. Get the most traction out of these programs by adjusting terms & rates to fit the needs of your members.

Offering reward-based checking programs is also a great way to generate account activity and bring in new funds from new and existing members. 

2. Generate new business with digital strategies

Adopting digitally-optimized technology tools can help build deposit activity with new and existing account holders, by simplifying access to your services. Digital lending, online banking, and mobile apps are all great ways to drive business across all consumer demographics, Millennials and Gen Z in particular.

At the same time, leveraging digital marketing tools like personalized emails, SEO, and targeted advertising can help you to outshine other businesses competing for attention.

3. Strengthen relationships with a data-driven service approach

Leverage data to target and personalize communications, and strengthen relationships with depositors. Data insights can provide a holistic view of your members’ actions and behaviors, so you can deliver more accurate service interactions and product recommendations. 

What’s more, data insights can also help you identify the members in your loan profile that offer the most growth (or risk) potential, which – when acted on – can have a significant impact on your entire portfolio.

Adopting these deposit growth strategies is sure to be win-win for both your credit union and members. Taking this approach will likely keep your business from needing to revert to less desirable practices for repairing loan-to-share, like pulling back on lending, while also offering a valued service to members.

Allied Solutions not only wants our clients to survive, we want them to thrive – and a deposit growth strategy should be a key component of any credit union’s lending strategy. 

Click here to visit our contact page or reach out to your Allied Solutions sales representative to learn about our deposit and loan growth solutions.