How would you describe these first few months of 2021? According to CUNA’s Monthly Credit Union Estimates, credit union loan growth continued to slow in January, including further erosion in new car lending. Total car loans nearly flattened at $381.7 billion, just 0.2 percent greater than a year earlier. New auto loans fell 5.8 percent to $140.3 billion, while used auto loans rose 4.1 percent to $241.4 billion. Though captives have gained shares in used cars, both banks and credit unions have been losing shares to captive lenders in the new car loan market.
However, there are positive signals on the horizon that bode well for auto lenders. Vaccine distribution is rolling out and COVID-19 cases are trending down across much of the country. A third stimulus package will deliver checks to millions of low-to-middle income Americans and income tax refunds should start rolling out in coming months. With consumer confidence trending upward and unemployment numbers dropping, pent-up consumer demand for vehicles could drive customers to the dealership. However, much has changed for many consumers and their credit position. Auto lenders – especially credit unions – have an opportunity to boost their loan portfolio if they stick to one tried-and-true tactic. Always: put the member first.
A credit union representative who is well-trained on seeing the member – not just the loan application – will convert more quality loans and build stronger relationships that will deliver long-term revenue. Understanding how that new vehicle will be used and attaching the right protection products to the loan can save the member money in the long run. How can you differentiate your credit union from the traditional bank or captive finance entity? Build a relationship by putting the member first both offline and online.
Build an exceptional member experience
Since the pandemic, consumers have welcomed online purchasing with open arms. According to Statista.com, in January 2021 online transactions increased 39.7 percent compared to the index period in January 2020. Credit unions have historically relied on quality customer service inside the local branch, but physical visits in many areas have gone by the wayside. If you haven’t already, it’s time to adapt your business model for the online world. Consider what your customer service looks like through your digital experiences.
- How easy is it to complete an application and get a pre-approval online? How about on a mobile device?
- Do you have dedicated customer service representatives to walk online customers through the entire process via chat/phone/video conference?
- Is it easy for consumers to research your ancillary consumer protection products and select them for their auto loan?
A strong digital presence is critical for the growing Millennial and Gen Z consumer base, who use apps, digital bill-pay, and often want completely digital help and services. Between 60 and 70 percent of Millennials and Gen Z access digital banking from their phones. They expect anytime access to banking services through their phones, they expect a secure experience, and they expect to be able to handle all of their financial decision making, including changing their services, through the app.
Evaluate your online presence not as a credit union but as a retail outlet for buyers purchasing a vehicle. Sites and mobile banking apps that make the purchasing decision easy are more likely to get the loan. Couple ease-of-use with strong online customer service and your credit union might build a lasting member relationship for all generations.
For more than 43 years, EFG Companies has helped clients build lasting member relationships. We serve as your partner in success, with the right consumer protection products, training and support for your credit union. Contact us today to learn more.