Typical scene during rush hour. A traffic jam with rows of cars. Shallow depth of field.

Where the rubber meets the road

On the final day of CU Direct’s DRIVE Conference in Las Vegas Thursday, attendees heard about coming trends in automotive retail, digital lending strategies and how they can improve their communication through body language.
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The auto financing 'revolution'

There’s a revolution underway in auto financing, according to Maryann Keller, principal of Maryann Keller & Associates.

According to Keller, moving the auto buying process completely online has proved more difficult than expected, but the Internet has changed car buying. The average new car buyer now visits only two dealers, and 30 percent visit only one dealership – although they probably visit many more on the Web. Some 90 percent of new car purchases start online.

“When everybody uses something, nobody has an advantage. So dealers are adding elements to their websites,” Keller said. “Some educate consumers on aftermarket products such as extended warranties, which is increasing sales rates.”

She said dealers want to work with lenders who understand their business and meet consumer expectations, and credit unions have something every dealership wants: an attractive member base. “Credit unions also have the ability to do indirect lending, so there is something for everyone.”

Keller foresees two major factors impacting vehicle demand in the next two years: affordability and consumer confidence. “Today’s consumers are relatively confident and therefore are willing to assume debt. Affordability has many variables, including the monthly payment and how much their trade-in is worth. In 2015 and 2016 there were record sales. In seven years the average price of a car has risen $5,000. Interest rates have remained low, which has positively impacted monthly payments.”

On the negative side, Keller noted it is getting more expensive to own a car. Insurance is going up because more cars are being totaled due to the rising costs of collision repair. Even a small front-end collision is expensive because a BMW lightbulb is $1,000 and the housing for a headlight is $2,500. “GAAP insurance today is less profitable, so the providers are going to have to raise their rates. Similar with extended warranties. Sales are still strong, but profitability for dealerships is going down.”
Andrew Downin, innovation director at Filene Research Institute

All you can eat?

Andrew Downin, managing director of research for Filene Research Institute, said credit unions can be thought of as a buffet. “At a buffet you can get pretty much whatever you want at one convenient location. At a credit union that means you can get a mortgage, checking account and a credit card. That is the primary financial institution model. But no longer is financial services like a buffet, it is like food trucks. Food trucks specialize in one thing, and they gather in one location. Consumers get their empanadas from one truck and a cupcake from another.”

Filene’s mantra: every decision has to consider the best interests of the member. Downin said consumers today value a seamless experience over everything else. This means not having to jump through hoops, and it means having the same experience online as in a branch. “Member engagement is the holy grail. It goes beyond getting a good interest rate on a loan, it is a feeling that ‘The credit union gets me.’ Engaged members deliver 1.37 times the annual revenue of an average member.”
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The playbook

Downin pointed to studies showing there has been a 20-times increase in mobile searches for banking terms in the last three years. Fully 50 percent of consumers say they search exclusively online for financial services. The number of channels members use to interact with the CU is only increasing. Downin said a big challenge is “channel thrashing,” if members start on one channel and have to go to another the information does not transfer with them and they have to start all over at the beginning.

Filene developed a Digital Lending Playbook, which gives five pieces of advice. One: Attitude is everything. Digital lending should not be seen as a separate division, it is an integral part of the lending experience. Two: Know what is important. Identify what is most important to members. Do they want to apply for a mortgage on a mobile device? Most important question: what is your credit union willing to strategically say “no” to? Three: Frictionless lending can be a help but it has potential pitfalls. A small step could be to allow auto-approving more applications by your top-tier members. Four: recognize the human touch versus the digital touch. Credit unions can focus on the human side of lending and partner on the digital side. It is difficult to be great at everything. Five: Integration cannot be an afterthought. Member information should be collected only once, regardless of the channel on which the member starts the interaction. Make the handoff from channel to channel seamless.
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Communication is key

Mark Bowden is the founder of communications strategy firm Truthplane and an expert on body language and non-verbal communication. He is the author of “Winning Body Language.” He said our brain stems automatically judge people as they are talking to us. This is part of our instinct to decide if someone is a friend or foe. “Body language can help us stand out, win trust and credibility,” he said.

Human beings put out signals to other human beings to get a reaction. Where we hold our hands while we are talking – raised in the air or down by our side, for example – can affect the reception of the information we are delivering,” Bowden said.

“It is easy to do or not do – we can choose how we communicate. We choose our behaviors on purpose to get our message across. Credit unions need to realize even if they have world class products and services, they still need to communicate well. Leaders can teach their staff good communication skills to use when interacting with others.”