Consumer Lending: Focus On Serving Members

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Credit unions' formula for lending success in 2004 may very well be different than we've seen in 2003.

In mortgage lending, many credit unions saw that line deliver a significant portion of their net gain in 2003. As the refinancing that has driven this volume inevitably slows, credit unions will need to focus on purchase money, which means shifting staff resources to generating demand.

For consumer lending, improvements in the economy well help drive demand for loans, but credit unions must fiercely compete to get their market share. Indications are that automobile manufacturers' 0% financing will remain, which means we need to continue working hard to educate members to stop at their credit union before car shopping.

To capitalize on 2004's opportunities, credit unions will need to expand their focus on member-centric service. That's a significant differentiation between CUs and other lenders. A key to this is meeting the demands of changing borrower demographics, which means offering 24/7 remote access via call centers, the Internet, and effectively-run indirect lending options.

We see plenty of opportunity to expand core lending opportunities. In fact, our research shows that overall, only three in 10 members having automobile loans actually got them at their credit union. And that number is even lower when it comes to securing mortgage and home equity loans. There will be a moderate increase in member interest in business loans. We urge caution and due diligence, if you choose to explore its risks and complexities.

Fee income will remain critical, so continue making the most of every lending opportunity you get. Use every relationship point as an opportunity to tell the credit union advantage.

Dan Meylink is chief officer, Lending Solutions Group, at the CUNA Mutual Group.

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