CUs that embrace the mission, ACT boldly on that mission, and promote themselves through all those good deeds (i.e., tell their stories) are seizing the moment, growing, and winning. Find out what you can learn from them.

Credit unions do a lot to help members in need. Throughout the COVID-19 Pandemic, many more members than usual have met that description. Credit unions have stepped up in many ways, some offering the standard payment relief measures and no- or low-interest loans. Others went above and beyond to ensure member service during the trying times, like San Mateo Credit Union.

San Mateo Credit Union President/CEO Wade Painter, featured as a Ser Tech Credit Union Superhero in this video, demonstrated the true power of collaboration with the programs his credit union provided. The not-for-profit cooperative partnered with the local government to help save many small businesses in dire need due to the COVID-inspired lockdowns, worked with fintech companies to ensure streamlined processes for its members seeking mortgage assistance caused by the economic fallout of the pandemic, and demonstrated his team’s sheer will to serve members above and beyond what others were doing as it pertained to mortgage forbearance offerings.

As a result, from June 2020 to June 2021, NCUA records show San Mateo credit union has grown more than $200M in assets to $1.6 billion. Obviously, interest income took a hit, but the credit union’s annualized net income is nearly $1M ahead of the same time a year ago! In California – one of the most severe states regarding pandemic restrictions! Net worth is at a healthy 10%, membership growth is an above-peer average of 5.37% and its loan-to-share ratio is also above peer at nearly 65%. And the credit union offered local grants and other support systems as well.

Of course, most credit unions have less than $1.6B in assets. What can your credit union do at your scale? I have some ideas for you and I’ll get to them soon. But first, here’s why CUs should consider following the lead of CUs like San Mateo:

1. It’s the credit union thing to do. People helping people. Not for profit, not for charity, but for service. Phrases and ideals we throw around in the credit union “movement,” but do we live them? I mean really live them.

So-called co-opetition has made credit unions wary of each other, seeming more so than the big banks that are eating our collective lunch. Many small credit union leaders automatically assume a larger credit union is looking to merge them. Larger credit unions often believe they’re big enough on their own. (Tip: You’re not.)

Get out of your rut and into your relevance!

The truth is true collaboration is hard. It’s more than throwing money at a charity, although that is nice and thoughtful. But really digging in with another organization or multiple organizations and the money, time and politics that go with it, can be mentally draining and collectively exhausting work. However, the results for a credit union’s community, field of membership, the credit union and its members can be equally rewarding.

2. It’s the right business thing to do. Now, perhaps more than ever, consumers are socially conscious – some even woke. Serving a community as a stellar corporate citizen is critical to credit unions’ relevance. The more your credit union can do, the more the community is aware of your efforts – and your products and services. Modern – hell effective – marketing is not about what you say, but what you do. And what you say about what you do, which leads me to…

3. Public awareness for your credit union. Just google San Mateo Credit Union news. The feed is filled with local, regional, national, trade publications and other stories sharing the good word about the credit union’s deeds. And all that news coverage provides 1) more avenues to build trust, 2) additional brand awareness and 3) hella-great Search Engine Optimization for more people to find your website.

Credit unions have a real problem with sharing their stories, and those who know me understand what a pet peeve of mine it is. This best-kept secret mentality is bullshit. It ain’t bragging if it’s true.

4. Real member-support stories that build awareness for the credit union community. Enough with marketing your rates! I guarantee you some other financial institution’s is better. Rates need to be competitive (and honestly, how much trust does “as low as” build with potential members who don’t have perfect credit – the very average Joe’s credit unions were intended to serve, and particularly those of modest means). But marketing must reflect your credit union’s community.

Is your area particularly earth-friendly? Is it diverse ethnically? Does the population skew toward younger singles or established families? Does your marketing reflect that?

The definition of marketing has expanded tremendously over the last decade or more. It’s not fancy slicks in your lobby. Get strategic about it! Incorporate strategic initiatives that make sense for your credit union and your field of membership to expand sponsorships – and yes, collaboration – within your community. That is how your credit union can grow and prosper exponentially. Simply help people. Live the ideal.

For all this jibber-jabber, no I’ve never worked in a credit union. I do serve on the board of one. Credit unions’ first question about something new is inevitably, ‘What other credit unions are using this?’ And it’s every account executive’s worst nightmare. Someone must be first, and if it makes good business sense, it might as well be your credit union. Credit unions’ risk aversion is its 2nd worst enemy (second to telling their damn stories!)

Sometimes it takes someone from outside to provide a new perspective – a different way of accomplishing your credit union’s objectives. I just conducted a strategic planning session and business plan with a client with data points they hadn’t considered previously that can help their business. Bring in outside help, such as Mitchell, Stankovic & Associates or Your Marketing Co. to get out of your rut and into your relevance! If you’re in a particularly financially distressed area, you might want to check out CU Strategic Planning. Don’t be afraid of a new perspective.

So, how?

Credit unions underwrite, structure and manage the risk of nonprime auto loans – and all other lines of business – according to TransUnion data. These loans outperform similar loans booked by other lender types. Sean Flynn, senior director of TransUnion’s credit union business and a credit union alum (so, yes, you can trust him J) recently told CUToday.info: “TransUnion strives to use information for good and unlock economic opportunities for all through data.” Again, with the data and different perspectives – crazy talk.

So, credit unions already are doing better than other types of lenders at nonprime business. When something is better, shouldn’t more people know about that? And how do you let consumers know what you’re up to? You may be sensing a pattern at this point. That’s because strategic marketing aligns with business objectives, such as increasing loan volume, interest margins (and what credit union doesn’t want that right now?!), membership, leads and the list goes on.

And did you know that credit unions’ nonprime auto loan borrowers have “more significant improvements in their credit score over time,” TransUnion’s Flynn shared. Sounds pretty credit union-y to me. Time to burn that bushel credit unions are hiding their light under.

Further, Flynn said, credit unions are leaving auto loan opportunities on the table and have the potential to approve more members at better terms if they incorporate newer scores built on trended credit data. TransUnion offers this service and found after a review of 40 large credit union auto lenders, 9% of these credit unions nonprime loans under the traditional credit score model, were actually prime or higher when using the trended credit score. These are members credit unions are turning away or pricing higher than they need to be.

In addition, Open Lending, a TransUnion partner, offers proprietary data analytics through its Lenders Protection platform that provides a more comprehensive and highly accurate view car loan borrower’s credit worthiness. And if one of their loans happens to go bad, it’s backed by default insurance. Sounds incredibly promising for credit unions that want to dip their toe into better margins and helping members in need with less risk. (By the way, Sean Flynn is no relation to Open Lending CEO John Flynn; I asked.)

Credit unions are more prime lenders than they think they are.

Flynn also told me that of the collective credit union auto loan balance, 21.6% are nonprime, compared to 27.7% for banks and 21.7% for captive lenders as of yearend 2020, according to TransUnion’s Prama Analytics platform. The average loan balance is also lower at credit unions than any other lender, perhaps due to credit unions’ love of used car loans – not sure where that comes from.  Doesn’t smell credit union-y to me.

To the positive, TransUnion’s data also illustrated that car loan payments to credit unions are lower than the others, despite shorter terms. One might also argue that credit unions are underwriting these loans more conservatively, which is why they are performing better than nonprime auto loans at other lenders. Credit unions have the 1.22% delinquency rate to prove it, well below competitors.

Credit union boards and leaders certainly must run a viable business to support their members, but when the net worth ratio of credit unions less than $500M in assets is sitting anywhere between 10% and more than 15%, per the NCUA, and loans and membership growth are nonexistent – these credit unions should be more afraid of not doing something rather than sitting there watching members’ hard-earned equity dwindle away! Hell, Ser Tech’s credit-data targeted Fetch Marketing can help you find members that meet your underwriting standards, and even target those with credit scores that have a few dings.

Most of these credit unions want to survive and their members want them to survive. But they’re resource strapped. So, what to do? Put in the hard work, collaborate for relevance and tell your story.

I believe in credit unions, as do many others. Let’s live the ideal.

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