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CUNA Mutual pilot How to engage indirect borrowers
HOLYWOOD, Fla. (6/23/08)--To help credit unions turn “one-and-done” indirect borrowers into long-term, profitable members, a CUNA Mutual Group pilot yielded results and several findings from which credit unions can build strategies, according to a recently published white paper. “Developing Members from Indirect Borrowers: Lessons Learned” provides insights into how 13 pilot credit unions built multi-product relationships with members through a dedicated call center staffed with trained, full-time outbound-call representatives. Results of the four-month pilot were presented at CUNA Mutual’s Discovery Conference this week. “By investing resources to help credit unions deepen relationships with indirect borrowers, CUNA Mutual sought to address one of the industry’s biggest lending challenges,” said Heather Thiltgen, vice president, consumer programs, CUNA Mutual. “The pilot identified ways credit unions could engage indirect borrowers by introducing other credit-related products to meet their needs and save them money.” The most successful product offered to indirect borrowers in the pilot was a line of credit, which had a 28% sales rate. Credit cards netted a 17% sales rate and auto refinances had a 15% rate. The average line of credit was $2,098; credit cards, $5,005, and auto loan refinance, $16,140. Key findings from the pilot included:
* Members welcome phone calls from their credit union. Outbound call representatives received positive responses from members when they identified themselves as representatives of the credit union; * The phone call has a relationship-building effect even if the initial call doesn’t deepen the relationship; * The pilot’s pre-screening process enabled credit unions to obtain a member profile with data that helped match products to member needs; and * Credit unions can find success with outbound calling in indirect auto lending. New members view it as a personal touch.
Amplify CU, the pilot’s early adopter, derives 50% of its new membership through indirect borrowers. The Austin, Texas-based credit union has $465 million in assets and 42,000 members. “The pilot was very well done in that CUNA Mutual devoted proper resources, time and energy that delivered a program from which we could all benefit,” said Pierre Cardenas, Amplify’s senior vice president--retail. “The most interesting outcome for us was that call center personnel who weren’t our employees were just as effective as our employees. Our members responded very positively, which indicates outsourcing this in the future might be worth considering.” To deepen relationships with indirect borrowers, Thiltgen recommended credit unions implement some of the best practices CUNA Mutual incorporated into the pilot, including:
* Dedicating resources to make the program successful; * Verifying regulatory compliance surrounding use of credit data; * Obtaining necessary technology/systems support; * Tracking results; * Pricing for the relationship; and * Remembering that auto loans are seasonal and considering other outbound opportunities such as new-member onboarding programs.
“The pilot produced some interesting results on what appealed to indirect borrowers, such as, the success of an auto-loan closing was best when the member saved at least $20 a month,” said Thiltgen. “Also, those with higher credit scores were least likely to accept card offers, and line of credit offers were the most successful, which might be related to the sense of security it creates ‘just in case’ something happens.” “Above all, the pilot validated that our outbound-calling strategy to rein in these new members was on the right track,” added Cardenas. “This proactive approach to onboarding indirect borrowers is the wave of the future. Credit unions can’t afford not to engage these members or any other new members coming from other channels, for that matter.”
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