ARVADA, Colo.-A group of credit unions here has found success building membership and growing loans by appealing to young consumers through avenues that include video games and poker tournaments.
The 10 CUs in MyBank2Go, a program from the Alliance of Rocky Mountain Credit Unions (Credit Union Journal, May 17, 2010), have seen membership growth since they began hosting events aimed at young consumers.
Sundie Seefried, CEO at Partner CU here and a member of the MyBank2Go steering committee, said that each tournament averages about 50 people, and each event generates about 10 to 15 new members for MyBank2Go CUs.
One of the chief goals for the event organizers at this point, said Seefried, is getting the demographic's attention, "and this seems to be working. They come to the event and bring a friend, and next time they bring two or three friends, and the friends end up joining the same credit union as the member that brought them."
As the CUs make inroads to Gen Y membership, they are also striving to create profitable members through MyRide2Go, an auto loan program targeting members between the age of 18 and 24. Seefried pointed out that many of these consumers struggle to find a co-signer for a car loan, so MyRide2Go allows them to apply for a loan (generally between $4,000 and $12,000) without one. The catch, however, is that the car comes equipped with a Pass Time "starter interrupter" (installed by Auto Trek), which beeps at the driver both as a reminder before payments are due and when they are overdue. If necessary, the device can prevent the driver from starting the vehicle if the loan becomes delinquent.
Seefried explained that the device is part of a financial education component that goes along with the program, so that borrowers understand the responsibilities involved with owning a car. Because of the risk involved, MyRide2Go CUs limit the loan amount to a level where the member can afford the car and insurance.
But, said Seefried, "Quite frankly, if they are 24 years old and have a good job and can afford it, we can go outside of the $12,000 or $13,000. Each credit union continues to underwrite their own loan based on the risk, so certainly there's going to be a time when a co-signer isn't required."
How Pricing Is Set
Each CU can price the loans as they see fit, but Seefried said that the group caps rates for the program at 12%, and most CUs set their loans around that rate. "After a year of good payments, we'll talk to our members if they come in, and they can re-fi it at a better rate, like any other member, because they've established the credit history with us," said Seefried. Members can also have the Pass Time device turned off after 12 on-time payments. "In two years, we've only had three loans go bad," said Seefried, adding that the group currently has about 100 auto loans on the books.
Seefried and the rest of the MyBank2Go group hopes that car loans are just the beginning. "We want the car loans, the first loans, the membership-but the way we get their attention is we hold [game] tournaments."
She added that "Once we build their trust and get them into membership, get them opening checking accounts, we can move them into other loan products." The CUs are preparing to launch a first-time home-buyer product sometime next year.
Because of the no-pressure approach to attracting this young audience, Seefried said that CU staff gets very energized about it. She noted that it's very easy for frontline employees to ask members if they have children in that age group, or ask younger members what their weekend plans are. "It's very easy to reach out and talk about their credit union actually doing something cool," said Seefried.
