LAS VEGAS-It's a common concern of many credit unions: members who come aboard due to an indirect loan never become fully participating members. But that's a problem that is often self-inflicted by those same CUs, and can be resolved, according to one person.
Tony Boutelle, president and CEO of CU Direct Corp., said recent research by Neil Goldman, senior partner at Goldman Consulting & Strategy, Del Aire, Calif., found a significant number of consumers who stated no one bothered to ask them for business.
"The cross-selling element that is most successful is personal interaction-either a phone call or giving an incentive to visit a branch," Boutelle told Credit Union Journal during CU Direct's recent Lending Conference here. "Try to get face-to-face time because that is what people want."
According to Boutelle, credit unions are reporting some success in using online sources for engagement, with the least successful channel being direct mail.
A critical element to keep in mind, he continued, is many consumers hate their banks and would like a reason to leave. But with that desire is practicality-they want someone to make it really easy for them. The biggest issue is transferring bill pay, which is perceived as taking a lot of effort.
"Dollars-wise, the research found about $100 to $150 seemed to incent people to move," he said. "Also, it found 24% of credit unions were able to convert 20% or more of indirect members to full members."
Technology = Game Changer
Indirect lending is a "different business today" than it was five or six years ago, largely due to technology, Boutelle said.
"We want to help credit unions make more loans and improve efficiency, and there is a lot they can do," he said. "Credit unions are engaged in making loans and the technology works. We have had good offerings for a while, but credit unions are more interested in making loans these days."
CU Direct has 70 technology experts developing and supporting solutions, and it owns all of its intellectual property. Boutelle said the development of applications for smart phones and other handheld devices has been "critical," as the company has a central database that links to a smart client he said allows a richer experience and faster refreshing of pages on a given device.
"Members can use apps not only to compare rates, but also to shop for a car and calculate their payment. We have an SOA, or service oriented architecture, which allows for a faster exchange of data.
Get Members Preapproved
The biggest change Boutelle sees developing in auto financing side today is consumers getting preapproved before they go to the dealer, and the information sits inside the dealer portal. That scenario, he noted, makes is easier for a member to get the loan done at the dealer.
"Instead of the F& I person searching for a loan, the member can say it is from the credit union and the dealer retrieves it from the portal," he explained.
As credit unions pre-approve members for loans, nearly 80% of those claimed by a dealer fund with the credit union through the CUDL system. Boutelle said he believes this is evidence the company is helping credit unions engage with their members in a more meaningful way.
However, Boutelle cautioned, "Credit unions need to recognize loans are a commodity, and right now everyone has low rates, so the key is to help people with the shopping experience. Help members locate a car while keeping the financing top of mind."
In 2012, CU Direct exceeded 1,000 credit union clients for the first time. Boutelle said it was ahead of the market and non-CUDL credit unions in 2012 versus 2011.
"When the recession hit we added other products, covering analytics, retail lending, loan originations and vehicle aftermarket products."
