Lending

Lending: Focus on Current Members First

‘You must create your own recovery.’

October 25, 2012
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Members and nonmembers are more cautious due to the poor economy, but that doesn’t mean credit unions should abandon loan growth strategies, says Patrick McElhenie, a sales planner with CUNA Mutual Group.

Credit unions can grow business by focusing on current members and then reaching out to nonmembers in the community.

“You must create your own recovery,” he says. “The economy will continue to move slowly forward, interest rates will remain low, and consumers [will remain] cautious. But you have the tools to help your credit union grow. Focus on your members and community and the rest will come.

“Many households don’t have the same resources they once had, causing a change in people’s spending and borrowing habits,” McElhenie continues. “There’s a lack of household demand for loans because people are paying down their debt and spending less. But people are looking at lending differently, too. People don’t go and get a loan today; they see financing as a product feature, making point-of-purchase a financing boom.”

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Despite changes in the economy and members’ habits, the key is to focus lending on current  members first, McElhenie says.

“Let’s not forget, our members are our owners,” he says. “But more importantly, they will do the advertising for us based on their satisfaction. Quite often, credit unions are all too timid in sharing what they can do for their members.”

Credit union members are looking for three things when it comes to lending: guidance, solutions, and credit with reasonable terms, he says.

Look for loans to rewrite for your members, suggests McElhenie. Then, look to young borrowers to develop your next generation to replace baby boomers, many of whom are no longer borrowing.

Remember, not everyone is in financial trouble, or about to lose his or her job, McElhenie says.

Therefore, encourage members to seek bargains in the home and auto market, especially young members just beginning to build a life and home, he says. Or, consider starting a first-time borrower program.

Adopt a ‘we are one’ attitude
Credit unions can also build their loans while building their communities.

When it comes to auto loans, adopt a “we are one” attitude at your credit union. Issue the same rates and terms for direct and indirect loans, McElhenie advises.

“Most members will gravitate to a point-of-purchase transaction, but the goal is just to get the member’s loan,” he says.

Reward card programs that give back to the community show promise.

The “HutchCard,” a Visa card issued through $188 million asset Hutchinson (Kans.) Credit Union, raised more than $200,000 for a local zoo and city parks during its 10 years of  existence, McElhenie says.

“Don’t forget about your community,” he says. “The community is your yard—don’t neglect it.”

McElhenie addressed CUNA Mutual Group’s third-annual Online Discovery conference.

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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