Arizona has seen its share of ups and downs during and following the Great Recession. The state is still in the process of recovering in the wake of the economic downturn but is seeing an upward trend in growth.
According to the Arizona Department of Administration, the state is projected in the next two years to replace jobs lost during the recession in 10 of 11 monitored job sectors. While these are positive indicators for Arizona, its people are still hesitant to borrow from banks and credit unions.
Financial trends throughout the state during the Great Recession showed that there was a severe lack of lending happening. Larger financial institutions and credit unions were impacted by this, and saw their bottom lines shrinking. Arizona State Credit Union remained strong during the recession, even though it saw the lending pipeline decreasing. We asked ourselves, "How can we let our members know that we can meet their lending needs?" The answer was an auto pre-approval program, as the need could not have been stronger.
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The poor economy had left a pent-up demand for lending in Arizona, particularly with auto loans. Most members believed that, because their credit had suffered they could not qualify for an auto loan. We strategized ways to reach these members to let them know that not only could we lend to them, but we could provide 90 days no payment and the ability to skip two payments during the life of their loan, providing that safety net they needed.
The pre-approval program targeted members who had the propensity to be shopping for a car. After determining which members could qualify, the credit union sent out pre-approval offers specific to each member, indicating the amount they were preapproved for. Members could receive these notices in their preferred channel, via email or postal mail, and a banner would appear on their online banking screen when they logged in. Once the program was implemented, we were eager to see how members would respond, considering the negative public perception of the state of lending.
The response was overwhelming. On average, the credit union was booking more than 600 new loans each quarter with more than $10 million in balances from the pre-approval program alone.
AZSTCU plans to continue the pre-approval program with the belief that money is a renewable resource that fuels the creative fires of our credit union.
Derek Longshore is vice president of marketing at Arizona State Credit Union. He can be reached at 602-467-4222 or [email protected].
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