Posted by Mr. Bill Meyer, Communications/Public Relations, Credit Union Direct Lending on 8/7/2018

With a strong, and growing position in the marketplace, credit unions need to lead with service as a competitive advantage. Incorporating technology that simplifies and improves the lending process, making for a better lending experience for members, is key.

 

Credit unions must also position themselves as the best partners for dealers. Building relationships that are mutually beneficial will provide credit unions with even more loans and market share.

 

Discover how one credit union’s approach to auto lending helped them achieve significant growth in 2017 and positioned them well for success in the future.  CU Direct sat down with Vantage West Credit Union, recipient of our 2018 Best Practice Award in Direct Lending, to discuss how they achieved excellence in lending, leading to the dynamic loan growth they experienced.  

 

Here’s a glimpse at what they accomplished:

 

·       40% decrease in turn time for funding loans

·       96% approved-to-funded

·       52.21% funded

·       3,708% ROI on auto loan flash sale social promotion

 

Find out more by watching their story...   

Categories: Business Partners, Financial & Auditing, Technology Consulting & Compliance
Posted by Chris Shipman , CFP, Advisor, Catalyst Corporate FCU on 7/26/2018

A credit union’s long-term success often relies on the direction received from its Board of Directors and the implementation of those directives by the ALCO. It’s important to have a strong, effective board/committee in order to guide the credit union. What are some tips to remember when assembling an effective board or committee? Here are a few:

Diversity. The most successful boards and committees have members that comprise a wide variety of skills and experiences. Diversity allows for different perspectives on credit union issues and provides meaningful reviews of risk, guidance, planning and direction. Building a diverse group of volunteers is not an easy task. The board or committee should have a mix of expertise levels, backgrounds, skills, aptitudes and competencies. The more homogenous the board or committee volunteers, the greater the potential for blind spots. When recruiting volunteers, be intentional: Recruit for volunteers who are different from the existing board/committee members; recruit for skills and expertise levels that will benefit the credit union long-term; recruit to fill in any perceived gaps that may exist in the current board/committee configuration.  

Term Limits. When members volunteer to serve on a credit union board or committee, often the expectation is for them to serve as long as they are willing. This can be good for both parties – the credit union meets a need, and the volunteer feels good about meeting that need. However, volunteers can potentially grow tired and complacent after a while. If this happens, the credit union may begin to suffer loss of fresh insight, energy and enthusiasm. An effective method to combat these issues is to set term limits for board and committee members. Limiting terms will allow the organization to rotate members, infusing fresh ideas and thoughts, while giving others an opportunity to serve. A number of financial organizations have established a three-year term limit, annually rotating one-third of their volunteers off the board. After a predetermined hiatus, the volunteer has the opportunity to serve again.  

Open Communication. Every volunteer should actively participate in meetings. However, the most difficult task in a group setting is giving everyone an equal voice. There will always be members who are outspoken and members who never say a word. A healthy committee or board facilitates a safe environment for each volunteer to voice his/her thoughts and ideas. An effective chairperson encourages the candid sharing of information to create an open dialogue environment. The goal is for all volunteers to develop mutual respect and trust for one another’s contributions and learn how to align differing opinions with their common goal. 

Building and maintaining a viable committee or board is achievable. Organizations such as Catalyst Strategic Solutions’ Advisory Team provide thought leadership on financial topics, including establishing effective boards that affect credit unions. After all, a credit union’s board and ALCO committee set the tone for its overall success.

Categories: Business Partners, Compliance, Education & Training, Strategic Planning & Consulting
Posted by Mr. Bill Meyer, Communications/Public Relations, Credit Union Direct Lending on 7/3/2018

CU Direct recently partnered with Visions Federal Credit Union on a case study that took a close look at the credit union’s success in the indirect lending marketplace, and the steps the credit union took to overcome the challenges it had in growing loans through the indirect channel.

Visions FCU's indirect lending program had been a manual process. Dealers would fax purchase orders to the credit union, and employees would manually enter the information into its loan origination system. The credit union’s loan officers would then have to call the dealership with loan approval or denial.

In 2013, the credit union began researching loan origination systems, as well as what dealers were looking for from them as an auto lender. Simply, the dealers were looking for a digital process. The credit union was looking to implement a digital indirect lending system that would enable it to meet current and future loan growth goals, while fostering and supporting a relationship with dealers that made the credit union a valuable business partner.

At the time, Visions had agreements with approximately 80 dealers to provide indirect financing. However, only a small percentage of the dealers sent the credit union applications, and even fewer produced loans that were eventually funded, creating a look-to-book issue. A lack of quick, digital loan decisioning was partly responsible.

Visions was also competing against other lenders that offered markup incentives to dealers, something it firmly believes goes against the credit union philosophy. The credit union needed an indirect partner that would provide it with attractive market differentiation that wasn’t tied to paying any markup.

Visions looked at many indirect lending systems, and ultimately selected CU Direct’s CUDL lending platform for several reasons. CUDL provided Visions with the ability to fund and retain more auto loans, increase profitability and fuel membership growth. Additionally, CU Direct’s superior business model allowed Visions to protect its look-to-book ratio.

The first year using the CUDL system, the credit union experienced a 60% increase in indirect auto loans, achieving $11 million in new originations. Over the next three years, loans through the indirect channel continued to increase, with $28 million in loan originations in 2014, $79 million in 2015, and $90 million in 2016.

In 2017, the year the credit union hoped to reach a once unthinkable goal of $100 million in auto loans, Visions ended the year with over $120 million in new indirect loan originations. In total, Visions’ overall indirect portfolio grew from $30 million at the outset to nearly $250 million. In addition to dramatic year-over-year growth in loans, the credit union has also grown membership 1,000-1,600 members annually since implementing CUDL in 2013.

Another important aspect to Visions’ indirect lending success was its commitment to seek out annual dealer feedback and use the data to make program enhancements that strengthened dealer relationships and increased originations. Taking advantage of CUDL’s wide dealer network helped fuel immediate growth for Visions’ indirect lending program.

When Visions committed to its goal of originating $100 million in new indirect loans per year, it took an “all-in” approach for three primary reasons:

• It could be used as a strategy to achieve new market penetration
• It was a way to serve members in a non-branch environment
• It supported loan growth goals

After five years of strong commitment to indirect lending, the credit union pointed to these major benefits for incorporating the CUDL indirect lending platform and executing its new lending strategy:

• Increased member and loan opportunities at the point-of-sale
• Joint marketing opportunities
• Loan portfolio diversification
• Opportunity to strengthen partnerships with community businesses

Visions’ “all-in” indirect lending strategy has been so successful, the credit union has increased its cap of how much indirect lending it can hold compared to other loan assets. “It used to be $300 million, and they thought we’d never hit that,” notes Tom Novak, Visions’ Director of Digital Banking. “But we recently increased it to $500 million, and we’re already halfway there as an overall indirect loan portfolio.”

Categories: Business Partners, Strategic Planning & Consulting, Technology Consulting & Compliance
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