Insights from the Non-Member and Driving Credit Union Engagement

By: Brian Werger, Director, TruStage Insurance Program, CUNA Mutual Group.

At the annual Discovery conference in August, CUNA Mutual Group Chief Economist Steve Rick predicted ongoing economic growth into 2018. Even with new car sales slowing from an 18 million-per-year peak and increasing interest rates, credit unions will continue to benefit from the second largest economic expansion in U.S. history. But, it won’t last forever. Rick stated that credit union membership growth will slow to 3 – 3.5 percent through 2018, due to slower job growth and slower lending trends.

This potential decline points to increasing focus on expanding membership. Recent research from TruStage® CUNA Mutual Group’s consumer insurance brand, examines an often-untapped opportunity for credit unions to grow. “What Matters Now®: Insights from the Non-Member,” is a deep-dive into non-member and under-engaged member mindsets, lifestyles, attitudes, and habits. These crucial insights can be invaluable tools for your credit union to reach this audience. Watch the recent webinar for a breakdown of the research here. 

Who are non-members?
Only 22 percent of hardworking families surveyed were fully engaged credit union members, meaning they consider their credit union their primary banking institution.* The other 78 percent of hardworking Americans fall into three areas of opportunity for membership growth: partially engaged members, disengaged members, and true non-members.*

Partially engaged members acknowledge that they are a credit union member, but say that their primary banking is done elsewhere. Disengaged members have credit union products, but don’t consider themselves to be credit union members (and note that only a small percent of this group were members via indirect loans). True non-members have no credit union affiliation at all.

Diversity impacting behavior
Among its key findings, the research revealed prominent levels of diversity among the three opportunity segments, which were more likely to be a Millennial or from a race other than white (vs. the “engaged member” population). These segments put a high value on brands that reflect their cultural identity, and that they were more likely to choose a financial institution based on a personal recommendation. This will be significant to credit unions aiming to grow membership in an economy where over the last 5 years, multicultural consumers accounted for 92% of US consumer growth, and whereby 2020, multicultural consumers will account for 98% of growth.

Recommendation: Add engagement level to your segmenting
Most credit unions already segment their targeting efforts based on demographic factors; an engagement filter can be a valuable addition. Take a closer look at the disengaged members. The What Matters Now research showed that this was the population with the highest propensity to make the credit union their primary financial institution in the future.

For more insights gathered by the What Matters Now research program, watch the recent webinar here. 

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner for Analytics and TruStage® Auto & Home and Life insurance products. More information and educational materials are available at nafcu.org/CUNAMutualGroup 

Tools to Boost Auto Lending

By Betty Seifu, Lending Program Manager, Allied Solutions.

A recent report released by the National Automobile Dealers Association predicted an increase in auto sales and leasing for a third straight year in 2017.[i]

With these car activities building momentum among consumers, there is an increased opportunity, and honestly, a need, for a strong game plan for scoring these potential auto loans.

Not only are you already competing with other financial institutions for loan opportunities, but now you’re also up against new players who have entered the field. Less traditional businesses like retail, mobile and peer-to-peer lenders are getting into the game to expand their services and attract new members.

This poses a threat to what credit unions have been seeing in terms of winning over auto lending consumers; many individuals are now looking for the best deal on the market no matter who is offering it to them.

Get ahead of your auto loan competition by building a strong lending program with unique and attractive consumer benefits.

Rewards Programs

Offering retail or cash rewards to borrowers who finance their vehicle through your institution is one way to draw in new auto loan business. One vendor surveyed participants of their auto rewards program and found that 95% of the respondents rated the program 5 out of 5 stars. In fact, this program vendor reports that their auto rewards program has increased their lending approval-to-book ratios as much as 90% on direct auto loans![ii]

Consumers are clearly very interested in auto loan rewards. And why wouldn’t they be? It is basically free money! These programs are likely to entice your consumers and generate a lot of new auto loan traffic for your institution, so why not sweeten the pot with multiple benefits for your borrowers?

Load up the bases so you can get that grand slam!

Cash Rebates

An independent study performed in 2016 by Aha! Online Consumer Research reinforced how much of a win-win complementary benefits really can be for lending institutions and businesses alike. More specifically, the study found that just about any individual presented with the opportunity to earn cash back would be interested in participating. In fact, 97.3% of consumers surveyed said they want their insurance company, employer or association to offer a cash back rewards program.

Much like a retail incentive in an auto rewards program, do not underestimate the value of a rebate check! According to this study, 82.6% of consumers surveyed prefer receiving a $500 check from their employer, insurance company or association over an offer of $1,000 off the price of a vehicle.

Take a look at the scoreboard: consumers want cash back, so offer them cash back!

One such cash-back rewards program offers a $500 rebate check to consumers leasing or purchasing a new vehicle from participating vehicle brands. This auto rebate program, called BonusDrive, is new, simple and quite attractive to consumers in the market for a car. In fact, BonusDrive is so new you may not even have been aware of its existence.

This puts you in pretty good field position considering that your competitors have likely not even heard of auto rebate programs, let alone thought about offering a program of their own.

By marketing this program to your consumers you place yourself at the top of the roster for financing when it comes time for your consumers to apply for an auto loan on their new car. Move to the top of the league today by adding unique auto loan benefits programs to your starting lineup. With the added bonus of being able to market and cross-promote these various programs, you will ensure that your credit union stays top of mind for consumers looking to choose an institution for their car buying and financing needs. Game over. The final scores are in and everyone wins!

Be sure to catch up on Allied Solutions’ recent auto loan podcast series to learn ways your credit union can take action today to better attract modern consumers, especially millennials. These podcasts address how to use market data to attract auto purchasers and utilize digital communication channels to invest in a stronger auto loan program.

Listen now: 

Building a Competitive Auto Loan Package: Go Big or Go Home

Understanding the Auto Market: Get Into the Minds of Millennial Buyers

New Allied logoAllied Solutions is the NAFCU Services Preferred Partner for Insurance- Bond, Creditor Placed (CPI), Guaranteed Asset Protection (GAP), and Mechanical Breakdown Protection (MBP). More educational resources and partner contact information are available at www.nafcu.org/allied.

 

[i] National Automobile Dealer’s Association https://www.nada.org/steven-szakaly-auto-sales-forecast-2017/

[ii] AutoLine Marketing Group http://myautoline.com/

 

Developing the Right Strategy to Engage Millennials

By: April Lewis-Parks, Director of Education and Corporate Communications, KOFE.

Millennials (generally defined as age 18 to 34) are quickly becoming the largest consumer segment in the U.S. They outnumber baby boomers by 11 people. However, despite their numbers, Millennials struggle to achieve financial independence. They are among the least likely to engage with traditional financial products and services. So, what can credit unions do to bring this generation into the financial fold?

The financial experts at KOFE: Knowledge of Financial Education captured this dilemma in a new infographic, “Millennial Money: Banking and Credit Fear.” As you can see, it details the challenges facing credit unions that are eager to engage America’s largest consumer segment.

The biggest roadblock to millennial product engagement is the inherent mistrust of financial institutions. Many believe big banks played the largest role in causing the Great Recession, and they don’t have the knowledge to differentiate those organizations from smarter alternatives, like credit unions. As a result, they lack an understanding of how traditional financial products improve their ability to manage money effectively.

Nowhere is this more apparent than with millennials use of basic checking accounts. Nearly one in four millennials say they will never open a bank account. However, more than half that number say it’s because they don’t have enough money to keep the account open. That points to a lack of knowledge about accounts that offer no minimum balance requirement and protections to avoid overdrafts.

Education is often the key to fostering more engagement. By increasing awareness of credit unions’ member-centric culture and educating consumers on the benefits offered by traditional financial products, credit unions can overcome millennials’ reticence.

This is the driving principle that led the certified credit counselors of Consolidated Credit to create KOFE, developing an out-the-box platform that can be used by partners, such as credit unions, to educate unbanked and underbanked individuals, particularly millennials. Using a third-party platform allows credit unions to engage in effective outreach, without diverting revenue into developing in-house education systems.

For an in-depth conversation about how to use financial education to capture your members’ attention watch KOFE’s webinar on demand now.

KOFE Logo 117

KOFE (Knowledge of Financial Education) is the NAFCU Services Preferred Partner for Financial Literacy. More educational resources and contact information are available at www.nafcu.org/KOFE.

 

The 3 Most Effective Methods for Managing the Equifax Breach

By Ann Davidson, VP of Risk Consulting at Allied Solutions.

The enormity of the Equifax® data breach has left a wake of fear and frustration among businesses and consumers alike. Names, social security numbers, birth dates, addresses, driver’s license numbers, and other pieces of private data were stolen from an estimated 143 million American consumers earlier this year.

Below are a number of things you can do to better protect your business and consumers from potential fraud exposures in the wake of this massive data breach:

1. PlanImplement rigorous security measures to better catch fraud attempts before they occur

  • When authenticating an account user, require personal information (i.e. high school crush, best friend from childhood, pet’s name) along with identifying information for access to the account to help prevent the identity theft of your consumers.
  • Require that the account holders have a password or passcode to access their account
  • Use multi-factor authentication:
    • Who you are: Inherence factors, such as biometric methods
    • What you have: Possession factors, such as ATM card numbers
    • What you know: Knowledge factors, such as password, pin or secret question
  • Don’t just rely on SSNs, birth dates, home addresses or driver’s license numbers for granting account access.
  • Adopt advanced tools, like biometric authentication, for verifying the identity of account holders.
  • Verify you have up-to-date contact information for all of your members’ accounts, including consumer cards and online accounts.
  • Set up a website with information regarding how you plan to communicate with your account holders about updates related to the Equifax cybersecurity breach.
  • Post and share contact resources and information for consumers so they know where to go to have their questions or concerns addressed.
  • Share educational resources and tools with your account holders that aim to help them prevent and manage identity theft and fraud.
  • Train staff on fraud warning signs and job-relevant fraud prevention/response procedures.
  • Proactively build a response plan, so you can swiftly implement the plan should any fraud exposures occur. See our Data Breach Preparedness Checklist for recommendations on building a strong plan.
  • Monitor likely points of entry for fraud, such as:
    • New membership requests
    • New products or services requests
    • Change of account holder information for existing members, such as change of address
  • Purchase institutional coverage that ensures your financial institution should a cyber attack occur.
  • Consider partnering with an identity theft vendor that offers “deeper” fraud monitoring services for consumers, namely:
    • Dark web monitoring
    • Social security monitoring
    • Address change monitoring

2. RespondAct swiftly and efficiently to help protect your business’s finances and brand, should an exposure occur

  • Set-up a designated resource or hotline for handling account holders’ concerns and questions related to the breach, such as:
    • Answering questions about fraud and identity theft
    • Assisting with credit and other monitoring services enrollment
    • Assisting with placement of fraud alerts
  • Offer professional identity fraud investigation and fraud remediation services.
  • Consider providing credit/other monitoring services at no-cost for consumers.
  • Contact Allied Solutions’ risk consultants if you are experiencing an uptick in identity fraud so we can help you to minimize the fraud exposure.
  • Notify law enforcement and regulators about the exposure.
  • Work with internal or external resources to notify your members about the breach:
    • Draft notification letters
    • Distribute employee scripts
    • Create FAQs for website
    • Write and send press releases
  • Contract with external resources to provide printing and mailing services for notification letters.
  • Contract with external resources to provide specialized legal assistance and forensic investigative services, if necessary.
  • Send out educational information to your consumers, about recommended steps they should be taking to protect themselves from identity theft, such as:
    • Monitoring accounts daily
    • Registering for free fraud monitoring services
    • Purchasing comprehensive identity theft protection
  • Use multiple channels to communicate with account holders – email, direct mail, text, etc. – so you are reaching them through their preferred channel and device.

3. Recover: Evaluate fraud damage and response effectiveness so you can modify your breach prevention and response measures accordingly

  • Evaluative questions to ask:
    1. Where did the fraud occur, and what could you have done to better protect that point of compromise
    2. Are there security tools you need to purchase or replace to more effectively prevent breach exposures?
    3. Where were critical errors made in following the plan’s procedures?
    4. Where did the procedures come up short in providing the direction that the team needed?
    5. What steps/issues could have been avoided with proper pre-planning or different procedures?
  • Once you have answered all of these questions:
    1. Prioritize next steps for improving your breach prevention and/or response processes.
    2. Implement prioritized changes immediately.
    3. Train employees on lessons learned and new processes.
    4. Set-up a timeline for adopting all other changes.

As you work to mitigate the impact of the Equifax breach, we strongly urge you to also share breach information and updates with your consumers, while also educating them about how they can prevent and manage the risk of identity theft. Watch Allied’s recent webinar for more best practices for educating and protecting your members in light of the Equifax breach.

Also, for a dive into the root causes of fraud and for advice and tools on how to prevent future attacks listen to our fraud series webinar here.

Sign up for Allied’s Risk Alert newsletter if you are interested in receiving regular fraud and security related insights and education.

Allied Solutions is the NAFCU Preferred Partner for Insurance—Bond, Creditor Placed (CPI), Guaranteed Asset Protection (GAP), and Mechanical Breakdown Protection (MBP); and rateGenius. Learn more at www.nafcu.org/allied.

Delivering Convenience Is Anything But Easy

By: Mark T. Nelson, CUNA Mutual Group.

Meeting your members’ demand for convenience is changing the dynamic of the credit union/member relationship. Members want to do business when, where and how it best suits their lives, and that may not be around your office hours or locations.

You may believe you know your members better than anyone. You may think the loyalty your relationship is based on is stronger than the appeal of competitors. And, you may think you’re already meeting their expectations and delivering a member-friendly customer experience.

But, there are a few problems with those assumptions. Loyalty only gets you so far. At some point, convenience becomes more important. As technology empowers people to manage their busy lives, they’ll inevitably gravitate to the path of least resistance as long as it delivers value and meets their needs.

In fact, a Chief Retail Officer at a large credit union recently said, “Most members are loyal to their credit unions. They want to do business with them, but convenience trumps that.”

Also, don’t confuse your vision of convenience with your members’ vision. According to an IBM study, 62 percent of retail banking executives surveyed said they deliver an excellent customer experience. But, just 35 percent of their customers agreed.

As a credit union, your challenge is how to compete in today’s technology-driven world. You need to adapt quickly and often to satisfy changing consumer demands and deliver a convenient experience. As a result, you may have to divert time and resources from other priorities.

For example, providing a new digital product or channel involves a number of considerations, including:

  • Technology expertise
  • Financial investment
  • Data security
  • Compliance issues
  • Ongoing maintenance

And of course, you must address these issues while meeting the ultimate objective – making it easy for your members to do business with you.

While delivering convenience is vital to meeting your members’ expectations, it’s a never-ending process. With the technology revolution continuing to pick up speed, you can feel caught between a sense of urgency and taking a measured approach.

Overshadowing everything is the need to get it right.Your members trust you to get it right. If you don’t, it’s now easier than ever for them to take their business to a competitor who does.

Click here to watch our recent webinar to learn how your members are driving innovation and changing your world.

CMG logoCUNA Mutual Group is the NAFCU Services Preferred Partner for TruStage® Auto & Home and Life Insurance Products and Mortgage Payment Protection.
More information and educational materials are available at nafcu.org/CUNAMutualGroup