Mark Schwanhausser, Director of Digital Banking at Javelin Research, joined The Credit Union Connection, delving into auto lending and credit unions’ critical need to adapt to the changing landscape. He emphasized Javelin’s focus on understanding digital banking through the consumer’s eyes, aiming to foster primary banking relationships and address the “existential crisis” many credit unions face with an aging customer base.
Schwanhausser highlighted that the traditional approach of simply offering a competitive interest rate is no longer sufficient. The goal, he explained, is to develop a relationship with members that provides value beyond just the numbers, making the credit union the first choice for significant financial decisions like buying a car or a home. He stressed the importance of engagement that extends beyond basic transactions, evolving into a lifelong financial partnership.
The conversation then shifted to the “eight phases of the car buying life cycle” identified in Javelin’s research. Schwanhausser outlined these stages, from researching cars and financing options to pre-qualification, loan application, car selection, purchase, loan initiation, and crucially, ongoing loan servicing. He pointed out that while fintechs like Carvana are engaging customers throughout this entire digital journey, traditional banks and credit unions are often only involved in one or two stages, primarily the loan application. This limited involvement creates “off-ramps” that lead members to competitors and hinder the credit union’s ability to secure the loan.
Javelin’s research paper, “Beyond Auto Loans: Opportunities for Lenders to Own the Car Buying Journey,” further explores these challenges and opportunities. The paper asserts that the dominance of traditional lenders in auto financing is under threat due to thedigitalization of the car buying process. This shift has accelerated timelines, removed geographical barriers, and opened the door for new players like captive lenders, “buy here, pay here” alternatives, online lenders, fintechs, and even social media influencers to impact all eight phases of the car-buying lifecycle. The report highlights that financial institutions lacking engaging digital banking experiences across these stages are at significant risk. It delves into key questions such as how challengers are gaining market share, how digital banking can engage customers at each stage, and how credit unions can counter “off-ramps” that divert potential borrowers to competitors.
Schwanhausser passionately argued that credit unions must become proactive “financial influencers” by leveraging digital banking to help members set savings goals for car purchases, rather than just reacting when a member is ready to borrow. He suggested that credit unions should position direct deposit as a powerful savings tool and utilize digital platforms to initiate conversations about future financial goals, fostering a “human-plus-digital” experience that includes personalized advice and guidance. By shifting from a transactional model to an advice-driven, proactive approach, credit unions can build lasting relationships that transcend mere interest rates, ensuring they remain the primary financial partner for their members throughout their lives.
To learn more about how credit unions can own the car buying journey and cultivate deeper member relationships, watch the full video interview with Mark Schwanhausser below.
Disclosure: Transcript below is automatically generated
Sarah Cooke
Hello and welcome everybody to the Credit Union Connection. I’m here today with Mark Mark Schwanhausser, welcome.
Mark Schwanhausser
Thank you very much. I appreciate the chance to be with you absolutely.
Sarah Cooke
Thank you. And Mark is the Director of Digital Banking at Javelin research, so I’m going to let Mark talk a little bit about himself and Javelin, and we’ll get into the meat of the study they recently released beyond auto loans, opportunities for lenders to own the car buying journey? Mark, yeah,
Mark Schwanhausser
well, if you aren’t familiar with Javelin, we’re a consulting firm that tries to look at digital banking, at least. Our team looks at Digital Banking through the consumer’s eyes to create experiences that will develop that primary banking relationship. And increasingly, we’re looking at one of the the two main questions we hear from our clients all the time, how do we get more engagement out of those glance and go customers, and how do we develop relationships that are going to last a lifetime? And and I think in the particularly for credit unions, one of the more recent reports we’ve written about was that existential crisis that many banks, or credit unions, rather, are are feeling, which is kind of an aging customer base, and how do I bring in the younger How do I develop a family banking relationship? And what we’ll be talking about today is in this big theme about developing relationships. Specifically, we’ll be talking about auto loans, but it applies to mortgage loans. It applies to your the way we deal with seniors and people with gray hair like me, who might be competent today, might want to have some professional help, some family help, and then might need to actually have more extensive banking relationships. So, you know, these are all the thing cutting through all of this is about, how do we take what I think is central to a credit union’s mission, which is the members interest. How do we develop a relationship that goes beyond, hey, I can easily check my balance, I can easily move some money around. But after that, what do I do? Is it the place I think about first when I’m thinking about buying a car, buying a home, caring for my parents, etc. So that’s kind of where our brains are here at javelin. And hopefully you’ll we’ll have a great conversation today about how it’ll apply specifically to car buying.
Sarah Cooke
Sure. Yeah, absolutely. And to your to your point, I like that that it does apply to mortgages as well. Because, I mean, it really applies to everything that a credit union should be doing, as far as building that relationship, but also building in a digital way. Since credit unions have always kind of had the upper hand at service, until COVID and everything went digital, and now I think they’re really ready to jump ahead. In fact, I’m hearing that they’re moving faster than the community bankers as far as technology is concerned. So yay for us. But so you, in the in the research study, you talk about the eight stages of the car buying life cycle. Now I want to give everything away. But can you, can you kind of highlight each of those stages and and we’ll go deeper into those as we as we go on,
Mark Schwanhausser
yeah. I mean, yeah, one of the things that we’re looking at here is keep in mind that when we’re buying things, cars and mortgages, it’s natural for us. We want to be the first in line with an offer, and hopefully we can win, but it’s tough for us to win if we’re in a bidding war, and it’s coming down to basis points. So how do we develop the relationship that has value, that will make a member say, You know what the basis point might be, somebody else, but the relationship, the the fairness, the the ability to see things all in one place, variety of different factors that outweighs the basis point questions. So when we look at the eight pieces of buying a car, or phases of buying a car, we’re looking at I want to research the car. I want to research what my financing options are. I want to try and get pre qualified. I do want to start shopping for a loan. I need to apply for a loan. I need to pick the car. I need to take the purchase and the loan initiation. And then there’s the transaction completion and the loan servicing part. And the servicing part is not to be forgotten. We we’ve got a piece that we just released yesterday, for example, in in looking at rocket mortgages, their acquisition of Mr. Cooper, they managed to help you buy the house, they managed to get you the loan. And now they’ve got potentially a. Continuing conversation about as you’re servicing that loan, that can lead to things. So you know, they’re all these phases of buying a car are really opportunities for us to get engaged. But what we see is that the credit unions and banks are not getting involved in all those categories and but some of the fintechs are and in particular, you know that they are developing relationships that in in Carvana case, are all digital. And every time they can, we call them off ramps to, you know, to other players. Anytime a customer, a member, takes one of those off ramps, it damages our ability, hampers our ability to make the loan and to be in the game. So we looked at it this way to sort of say, as Can you lead somebody, can you be connecting with them at more parts of the auto buying experience? The whole theme here, so much of our research is about using digital banking to win share of mind today in order to win share a wallet tomorrow. It’s a long game, and that is a shift for digital banking in a lot of ways, we’re good at selling products. Here’s the product. Here are the offers. Here they match up side by side, and then we say, you decide which one is best for you, no coaching, no advice, very little you know where there’s explanation, but basically, it’s a do it yourself process. And I don’t know about you, I don’t buy cars very often. It’s a complicated process. Sometimes you want somebody who understands the options and can explain things to you, and, you know, put you in the right loan, the loan that’s suitable for you can advise you, you know, what this car is really going to stretch your budget? You know? Maybe we should be rethinking that, you know. So it’s there are opportunities here, I think, for for credit unions to be thinking about digital banking in a way that is more than just here’s the sales page for auto loans and developing a relationship that helps people dream about buying a car, identifying a savings opportunity, developing a savings goal, developing a means to create it. And then one of my other pieces that I wrote earlier. I’m an old personal finance guy. My first half of my career was 25 years in the news business with the San Jose Mercury News I was personal finance writer for the bulk of that, and I’m not much of a fan of borrowing for cars. Once you buy a car, it depreciates greatly once you drive it off the lot. So I wrote a piece that said up here, let’s compare two different kinds of bar buyers. There’s the buyer who, every three years, wants to be in a new car. Well, that person, as we mapped out, is going to be in a cycle of debt for their entire life. They’re going to be basically cycling from one car to the next that’s not a great way to advance yourself financially. Now the other side is somebody like me, somebody like Jonathan pine, who used to be a financial planner, and the goal is to buy one car every 10 years, and you can after you’ve paid off your car loan in three to five years, certainly not seven. Who wants to be in debt to a hunk of metal for seven years and then continue making payments to yourself so that they know you have the down payment for the second car. And then you do the same process, and you get into your third car, and you know, over a lifetime, maybe you go through three cars, but you’re not in a cycle of debt. And so I think this is another case where advice is crucial. There’s good debt, there’s not so good debt. Car Loans are essential. They’re two people to make a living. You know, they’re justifiable, but you know, sometimes we need to have a little bit of a device about what car is appropriate for us, for our budgets, and help in terms of trying to figure out, how can I think about this longer term than just this car? And that’s where I think a credit union has great opportunity to be a financial influencer.
Sarah Cooke
Yeah, and so many are interrupting, disrupting the car buying space, like you mentioned, Carvana Tesla’s financing their own vehicles. And you know, all the captives, obviously, there’s all these digital lenders that are making it less, have less friction, shorter turnaround times. You know, all the of course, buy now, buy here, pay here, which is never great for a consumer, but sometimes that’s the only option they get. But all these are disrupting the traditional banks and credit unions that are financing the vehicles, and probably a lot more credit unions than banks anymore, especially the used car market is really the bread and butter. But what does. That mean when, when traditional lenders aren’t putting themselves inside of that cycle as earlier and often,
Mark Schwanhausser
well, it means that they’re going to be on the outside of the on the skirts of the decision making. They’re they’re going to be at risk of having somebody else influence them to pick a certain kind of a loan to do the auto financing at the showroom to you know, if you look at the finfluencers on Tiktok, you know they may be steering you to one place or another. All those are influential, influencing people to on where they should take out their loan. And they’re not going to be specific. They may mention credit unions, but they’re not going to mention your credit union specifically. So how do you get your name into that mix? And I think that’s the the challenge is, how to be proactive enough in somebody’s life that we’re talking about cars, maybe before they’ve even thought about talking about thinking about buying or leasing the next car, helping them to see the possibilities of what they can afford so in influencing the right kind of car to buy the kinds of financing that are available, you know, and obviously offering the pre qualifications and the idea that we can refinance, if you after the fact, but all of those things, the risk is that those are conversations that are happening while you’re not in the room, you know. So you know to parrot Hamilton, you want to be in the room where it happens, and the room where it happens that you have under your control is your app. You know somebody is in your app checking balances. And if that’s all they’re doing is monitoring their balance or moving some money, on occasion, but they’re not really thinking about the possibilities the next thing, if we’re not being proactive in understanding that they’ve got goals and things, then we’re missing an opportunity with every login you know to influence them. And this will go beyond the banner ad. You know, one of the big challenges that we see for digital banking is that the big you’re not going to win in a feature war. Nobody wins in a feature, especially against the big guys. So you have to carefully choose where you’re going to take your shots. And if auto loans is one of those, then we can develop we need to start thinking about, how do we develop the relationship around autos and how do we help people with saving habits? You know? So one tread of thought, train of thought here is, in order to buy a car, I need to have some money for a down payment or to actually pay for it. So can I help people identify the goal? Can I help them save can I use direct deposit to automatically create a savings habit. So many banks and credit unions treat direct deposit and position direct deposit as a convenient way to deposit your paycheck, no doubt about it, but everybody wants the direct deposit. Every challenger out there chime everybody wants the direct deposit. Why? Because it’s the steady connection. And what is important from a savings point of view, is it is the single most powerful way to save money. You know, if you can put 5, 10, 15% of your paycheck away into savings and direct it, piece of it into your car loan, you’ve now developed a savings strategy. But you don’t see banks and credit unions talking about direct deposit in this way. Virtually no bank mentions the power of savings. So where I’m going with this is, can we create a relationship that starts with digital banking? Yeah, it starts with the goals, the ability to save, the steering it to a car loan, the development of the car loan, the acknowledgement that you’ve achieved something and now you’re ready to buy, helping people identify how much of a car they can buy, pre qualifying them. You know, that’s so much different than, Oh, you saw our banner ad, because you’re ready to buy a car now, would you like to see our rate? Oh, our rate’s not quite as good. Oh, well, I guess we lose this time. Yeah, and that, to me, is the big challenge. How do we go from being a facilitator of loans? You know, when you have decided as a consumer that you’re ready to borrow, how can right now, we facilitate that with Easy account opening and research. But how do we do the big challenging thing, which is to create those conversations long before someone has even thought about buying the car or buying the house? How do we help them build. Yes, and that, to me, is the ethos of a credit union is building their finances, but our digital banking today is very much transactional. It’s very much do it yourself. You pick the product when you’re ready. And we’re missing so many opportunities, and this is a critical time when we have to start thinking about, if we’re going to take our limited budgets, what are we going to invest in? And I think it’s really important to start thinking about, how do we invest in relationships that are nurtured through digital banking,
Sarah Cooke
absolutely. And, I mean, there’s also credit unions, non interest income is is getting pinched further and further. And, you know, there’s the opportunity to upsell them GAP Insurance. Is it right for you, or the vehicle warranties, or what have you? You know, those kinds of things that are non interest income, that would help the credit union but also protect the member. It should they get into some kind of trouble. I know I cosigned for my daughter in law one time on a car loan, and thank goodness she had the GAP insurance, because within a year it was actually her mother who crashed it. But yeah, so yeah, yeah, those kind of things really help the member and help educate the member. I didn’t, I mean, before I bought probably my first or second car, I don’t, I didn’t know about GAP insurance, because before that, I was buying $600 clunkers from, you know, just from a person. So educating them on that as well can help build the revenue and the relationship both and so how can credit unions, you said, they really are missing opportunities? How can credit unions insert themselves earlier into the buying process?
Mark Schwanhausser
Well, from a digital banking point of view, I think it’s trying to think about how we help people save and how we apply the money, how we pick targets, how we develop the ability to reach those points, and how we anticipate and suggest ideas. I think another thing that you were just hitting on, that I think is critically important, is it’s not just digital. Digital is the facilitator. Yes, digital is a replacement for things that people can do on their own. Like, you know, I want to send money from here to there, and I want to do it in a real easy way. I don’t need to go the branch to do that, but there is a human connection here. So if digital can assist in creating that human plus digital experience, because, as you’ve just described, buying a car is not easy. You know, there are a few people who like negotiating with car dealers. I’m not one of them. I have a long history with from my my newspaper past. It’s not something I relish. It’s and I think there are a lot of consumers like that. And you just described three different things that are like, Oh, you mean I’m not just looking for the keys to drive off the lot and signing something on the bottom line, there are things I should be thinking about. You just introduce some spots where it’s an opportunity to advise. So if the digital banking can complement and and encourage people to come in at the at the time of buying a car. Now it’s a conversation, and I think that kind of relationship nothing is stronger than a one to one conversation in my mind. I mean, I’m as much even though I’m in digital banking. And I think it can do wonderful things. You know, there, there, if we can put somebody in front of a member and advise that is going to be the kind of thing that can overcome that. Oh, but this basis points a little bit better than that one, and can advise on but, you know, the dealer’s got 0% financing. Zero sounds really good to me. Well, let’s look at that. Let me walk you through that, how that works or doesn’t work in your case. So the digital banking, I think, is a mechanism to create an ongoing conversation. It’s a vehicle that can create the ability to get the steps set up in advance, to build your financial wherewithal, your confidence, your ability to borrow, build your buying, your credit and your borrowing power. That’s where digital can play, you know, some really important roles. And then if it can also help connect you to the advisor at the branch, then I think, you know, you’ve got a combination that can be quite powerful. But if what we do is stay in a reactive mode, tell me when you’re ready to buy a car loan. Look at our banner ad. Then we’re we’re going through the motions, you know? We’re putting ourselves on our back feet trying to find the right metaphor for we’re blowing it
Sarah Cooke
well, and the digital banking is a tool. It is not the thing you know. Is not the essence of the membership. Shouldn’t be anyway, like you said, it facilitates, but it, you know, having that one to one relationship, especially now in an AI world, a genuine one to one relationship, it doesn’t matter how old the person is who’s borrowing for this car. They care about that, especially a younger person who might not understand, you know, why they should get gap, or whatever the ad you know upsell is, because I mean young people, as you said, it’s complicated for us. We’re not, we’re not in our 20s anymore.
Mark Schwanhausser
Well, and I think if you think about young people, especially somebody trying to buy their first car, they know they need to save money. Well, if you don’t have money, there aren’t a lot of people professionals out there who want to help you. You don’t have the assets to go to an investment advisor. You don’t have the assets to go to a financial planner. So you have there’s no it’s obvious why they turn to friends and family for advice. It’s obvious why they turn to finfluencers on Tiktok, because the advice is free, and sometimes they trust it. They trust parents and family more than they trust Tiktok, by the way. But they’re looking at Tiktok, and you should not dismiss some of those people. They’re they’re very good at what they do. You know, some of them, they tell good stories. They often base things on good principles. But they’re not necessarily steering the customer back to the the credit union, although they may say, you know, credit unions are a good option. You know, they may be steering in another direction. So how do we get in front of that consumer? How do we help that person who’s starting out? What can we do? You know, the best spot to get somebody is when they get that very first paycheck. If you can influence what they do then and there, that first paycheck, direct deposit, save 15% if they can save 15% from day one. They are on the course to financial stability for life. They don’t have to tighten the belt at 30 or 40 or 55 when they’re doing catch up, you know. So there’s so many things that we could be doing to advise young people, and buying a car is one of those. You know, it’s probably going to be the first time they’ve ever bought a car. These terms, you talk about GAP Insurance, what? What is that? How does that fit in? I just thought I wanted these wheels. And they look, you know, I like the color. And, you know, I don’t mean to mean how people buy cars, but, you know, it’s it. They may have picked the car for the perfect reason, but then the financing part, that can be tricky. You know, the options are more than just a rate versus a rate. So how do we inject ourselves into that? How do we educate and provide that service of advising? If we do it right, we’ve got a relationship that’s going to outweigh the commoditized my rate versus their rate. And so it’s a what can we do with digital banking in from javelins point of view, what can we do with digital banking that’s going to create that kind of conversation, that’s going to be proactive and will tie in with the human element. So it’s not an either or branch or digital. It’s branch plus digital and but digital has got to be more than transactional. It’s got to be more advice driven. It’s got to have not just oversight, but foresight. And part of that foresight is going to be you know, are you ready to buy the car, or are you doing all taking the steps to buy the car? Is your car getting old? You know, there’s so many different kinds of conversations that we can be starting in digital banking. And typically we don’t. We stand back and we say, we do what we do very well. We react. You just come into the branch and we say, how can we help you? That is wonderful. When somebody walks into the branch in digital it’s not good enough. We have to be proactive. We have to anticipate. We’ve got to steer people to the kinds of conversations that are meaningful to them.
Sarah Cooke
That and that’s the personalization that everybody talks about. It’s not just putting their name on a newsletter. It’s, you know, I know where you are in your financial life, because I see your car loan here. And it’s, you know, you’re six, six years into your car loan, so you might need a new car soon, and get them thinking about it at that point and following the data to personalize it for sure. So Mark, we have talked about a heck of a lot to do with auto lending and how credit unions can insert themselves into the process earlier. So I always give my guests the final thoughts. So what last words of wisdom would you like to leave our credit union audience with today?
Mark Schwanhausser
I think the place to be. Is about being thinking proactively. It’s about looking for every opportunity to move from a reactive, transactional kind of relationship to one in which it’s advisor driven. You know, we’re delivering some form of advice. We’re helping people think ahead. And in my mind, that means developing these, these by getting ahead, we’re developing relationships. Relationship banking. In digital banking is possible, but we’re not good at it right now. We’re good at servicing, we’re good at facilitating, we’re good at making processes easy. Now what we need to do is start thinking about digital banking that is more on the lines of what a financial planner might be doing and in terms of like helping people achieve, identify and achieve goals. And that means the kind of tools being very selective and prioritizing where our investment goes. It means driving vendors, demanding that vendors do a better job of providing these kinds of capabilities so that you aren’t stuck with a me too product. But it’s about, you know, we’re at a real turning point. I believe in digital banking, it’s about whether we are going to be able to create relationships that are meaningful to people in digital banking that make them want to stay with the bank, borrow from the bank or the credit union, you know, continue the the primary relationship, and not say, Well, I’m going to get this product over here, and I’m going to get my P to P over there, And I’m going to get this loan over here, and you’re nibbling at whatever’s left over we want to be the first place that people think about when they think about their money. And if that’s a car, I want to be thinking about my credit union, and my credit union helps me think about that topic. So I think is, it’s a important turning point in digital it’s grown up, and now it has to move from reactive to proactive, from do it yourself, to help me do it. And that is something that’s hard to do, but it’s essential.
Sarah Cooke
Awesome, yeah. Well, thank you so much. I appreciate your time today, Mark
Okay, I’m glad to be here and have a great day. You.
1 thought on “Revolutionizing Credit Union Auto Lending: Javelin’s Mark Schwanhausser”
One theme that really resonated with me? The connection between financial literacy and trust. Not only are these two concepts intertwined—they’re inseparable. You can’t build deep financial understanding without a foundation of trust, and trust is earned through real conversations, not just completed transactions. Regardless of the point in the account or loan lifecycle; opening or closure, payoff or delinquency. Member’s need to know their CU has their back!
Those one-on-one moments with members aren’t just about solving problems or answering questions. They’re opportunities to:
– Strengthen relationships
– Build confidence
– Empower smarter financial decisions
When we prioritize the person over the process, financial literacy becomes not just a goal, but a shared journey.