SAN ANTONIO — In gaining a "share-of-wallet" that can result in a win-win for the member and credit union, there are several options credit unions might consider.
That was the one of the messages shared at the CUNA Lending Council's annual conference.
"With shrinking margins, credit unions need to explore every avenue to generate income and there are options available to them," said Tom Keepers, director, product management, at CUNA Mutual Group. "One in particular that's a win-win for members and credit unions is loan protection. It's non-interest income that benefits the credit union and provides value to the member."
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Keepers said consumers are taking on more debt than ever before. "Members have more negative equity today than ever. Loan protection can help a member transition through a difficult time, especially given the high debt levels of many members."
According to Federal Reserve statistics, total consumer installment and mortgage debt reached $12.6 trillion at mid-year 2007, the highest level ever. In determining a sound strategy for generating non-interest income, Keepers recommended credit unions follow the four "P's" of marketing: product, price, place and promotion.
"There are many products available to members as part of the lending event, from credit insurance or debt cancellation and vehicle service contracts to emerging products aimed at protecting negative equity," Keepers said. "In determining which product is the best fit, you need to know your members' needs and proceed from there."
Keepers said there is a misconception about pricing elasticity. "Demand doesn't always go down as price goes up. Members are buying value. It's a function of how a credit union positions the product."
The "place," or channels–face to face, Internet, call center, mail and others–depend a lot on a credit union's value proposition, Keepers said.
"For instance, if you have a high-trust relationship, you may want a lending officer involved. In other cases, the convenience of online lending may be the best avenue."
Communicating a consistent branding message to staff and members is vital, Keepers added. "It isn't just about promoting the brand to members. The commitment to the product must be manifested to the staff, he pointed out, as well as paying attention to the staff and building employees into a marketing plan as an audience.
"Finding an answer to shrinking margins can be a win-win. Members have more debt exposure today than ever before. They have a need to protect against unforeseen adverse events. That can result in favorable fee income for the credit union, but a value, also, for the member," Keepers said.
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