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Despite Challenges, Lending Opportunities Aplenty as Economy Improves
Thursday, October 3, 2013 6:35 AM

Despite competitive and other challenges, forecasts of modest economic growth provide great opportunities for credit unions to add to their bottom line in a member friendly way, an Online Discovery audience was told Tuesday.

Though vehicle loans are driving a rebound on lending, Dan Kaiser, senior vice president of lending with the CUNA Mutual Group, said a more favorable economic outlook affords many other lending opportunities for credit unions to meet members’ needs, while generating non-interest income for the credit union.

“We know membership is growing in response to banks’ bad behavior, so credit unions that are smart and aggressive have opportunities to grow by capitalizing on the recovery,” Kaiser said. “Being aggressive on recapturing vehicle or home equity loans are prime opportunities and credit unions need to make their own judgment on direct and indirect lending, but it’s an option they shouldn’t discount.”

“Though a pressing regulatory environment and competition coming from a variety of platforms create challenges, retail banking is also seeing opportunities to grow in an improving economy,” Kaiser said. “The credit union lending protection model is fairer and much more member friendly than banks and is more apt to survive regulatory scrutiny.”

Kaiser said, “One challenge credit unions have to overcome, though, is adapting to a sales culture. Having products that benefit members is a two-pronged benefit – to members and the credit union, but it requires that members be educated on the products’ benefits. It’s important for the credit union to be successful in selling these products for their financial viability.

“In addition to traditional borrowing opportunities, lifestyle and ‘green’ lending not only respond to members’ changing priorities, they are more opportunities to meet members’ needs,” Kaiser added. Kaiser cited cosmetic surgery, weight loss and adoption as examples of lifestyle lending opportunities and electric vehicles, replacement windows and insulation as green lending examples.

“Yet another challenge in meeting members’ needs is providing them with service on the channel they prefer,” Kaiser said. “All the things you’re supposed to do, mobile lending capabilities, virtual branches and solid web sites are add-ons, not substitutes.”

Kaiser said, “Credit unions may not be serving the “sweet spot” of credit union membership if they don’t provide mobile banking. It’s easy to look at smartphone lending use as a Gen Y issue. Actually, 55 percent of the 45 to 54 age group have a smartphone. If you’re not providing mobile banking, you’re not even meeting needs of current members.”

Online Discovery is an annual conference sponsored by CUNA Mutual Group.