At two credit unions in the Midwest, a radical culture change in the workplace and a shift in how collection efforts were carried out have helped their respective loan portfolios grow.
For the $1.5 billion Affinity Plus Federal Credit Union in St. Paul, Minn., the collections department became the “solutions” department a few years ago, said Dave Larson, senior vice president.
Larson was one of the guest speakers today during the “Loans: The Next Frontier” Web seminar, which was hosted by Credit Union Times and moderated by Sarah Snell Cooke, editor in chief.
VIEWING: Watch the webinar here.
That name change helped Affinity Plus to empathize with a member’s circumstances rather than rely on traditional methods of collecting on delinquent loans, Larson said.
“We start with the person, not the credit score. The answer is across the desk, on the phone or an email,” Larson said. “We do use credit for pricing but that’s not where we start. Bad things can happen to good people.”
Affinity Plus currently has $1.4 billion in total loans with mortgage making up a very aggressive slice of the portfolio pie, Larson noted. Consumer loans take up about 15% while real estate continues to grow, he added. Despite having a $350 billion indirect loan business at one point, the credit union decided to exit the business in 2004 because it struggled to build long-term relationships this way.
Larson said while it was a hard decision to make, it was just as well since the move fit nicely with how Affinity Plus changed its thinking toward helping members who may have fallen on bad financial times. Eighty percent of the credit union’s more than 150,000 members are borrowers and over 99% of them pay their loans on time every month, he said. More than 80% of new members are referred to Affinity Plus by current members.
“Prior to 2004, we dialed for dollars. Performance was based on the number of calls and contests – who would pay and wouldn’t pay their loans,” Larson said. “We didn’t think it brought meaning into banking at Affinity Plus. So, we took a look at collections and said ‘let’s turn this inside out.’”
At the $1.7 billion Community First Credit Union in Appleton, Wis., a sales and service transformation has also helped not only loan growth but across other channels, said Minh McKenzie, vice president of sales and service. It started with a credit union-wide training program that emphasized member satisfaction, accelerated growth and gaining market share.
Sixty percent of Community First members are borrowers and the credit union’s delinquency rate is 0.73%. Between 2007 and 2012, the credit union increased its ability to protect more loans going from 18% to 48% as of June. GAP protection usage increased from 30% to 52% during the same period.
“Our objective was to modify some of our behaviors and transform the team to provide a ‘wow member’ experience,” McKenzie said. “We wanted to make sure we were improving sales without sacrificing service.”
McKenzie, who was hired at the credit union in 2007, came from Wells Fargo. Ironically, the same bank used the same training program that Community First implemented but there was a glaring difference.
“Wells Fargo did not focus on the service piece. It focused on the sales piece” McKenzie said. “It was product centric, not customer centric.”