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Membership Growth Slowdown? Here’s How Credit Unions Can Fight Back · Leaders in Lending

• 0:00
  Speaker 1: Seventy percent of newly open accounts go inactive in the
• 0:02
  Speaker 1: first ninety days.
• 0:03
  Speaker 2: Anyone go fishing before.
• 0:05
  Speaker 3: If you've got thirty percent of your cast had some
• 0:07
  Speaker 3: sort of a bite, you'd be out there every day.
• 0:09
  Speaker 4: Right.
• 0:09
  Speaker 2: I quit my job just a few full time fishing.
• 0:11
  Speaker 4: They don't care about their rate. They care about driving
• 0:14
  Speaker 4: the vehicle off the lot, and they want to get
• 0:15
  Speaker 4: it home.
• 0:16
  Speaker 1: Credit unions focus on retention over acquisition. Hi, thank you
• 0:24
  Speaker 1: for joining us today. Membership growth is some people think
• 0:29
  Speaker 1: is shrinking across the industry. Some people think is just
• 0:32
  Speaker 1: growing at a slower pace than it had been historically,
• 0:37
  Speaker 1: and we want to talk about what's driving it and
• 0:40
  Speaker 1: what credit unions can do to change that membership growth.
• 0:45
  Speaker 1: So I've got Drew and Barry with us today. I
• 0:49
  Speaker 1: guess one like, what's your reaction to that, that idea
• 0:52
  Speaker 1: that membership growth is shrinking and why do you think
• 0:55
  Speaker 1: that credit unions may be losing numbers despite loan growth today?
• 1:00
  Speaker 3: I think membership growth is shrinking for some segment of
• 1:04
  Speaker 3: credit unions. They tend to be smaller anyhow, and in
• 1:08
  Speaker 3: some cases may not be able to have a digital
• 1:11
  Speaker 3: platform that is not just attracting new members to them,
• 1:15
  Speaker 3: but actually keeping members. Perhaps there's elements of banking transactions
• 1:20
  Speaker 3: that their members can no longer do that they are
• 1:23
  Speaker 3: otherwise getting served at perhaps a larger institution. I think
• 1:26
  Speaker 3: the larger institutions are still growing from membership perspective, But
• 1:30
  Speaker 3: of those memberships, you know, I do wonder if those
• 1:34
  Speaker 3: relationships are getting deep into enough that they're going to
• 1:39
  Speaker 3: be meaningful for the credit and going forward. We always
• 1:42
  Speaker 3: used to talk about PFI primary financial institution. Well, I
• 1:45
  Speaker 3: don't think anyone as a primary financial institution anymore.
• 1:48
  Speaker 2: Personally.
• 1:49
  Speaker 3: I deal with multiple credit unions and banks for different reasons,
• 1:52
  Speaker 3: and it's just sort of happened to be that way.
• 1:55
  Speaker 3: And I don't feel I have a need or even
• 1:58
  Speaker 3: a desire to have everything in one place. And I
• 2:01
  Speaker 3: know from my credit union experience, and Drew you probably
• 2:03
  Speaker 3: had the same serve experiencing your credit uni that it
• 2:06
  Speaker 3: was all about PFI. We've got Lynn now as a
• 2:08
  Speaker 3: brand new member. How do we get everything from Linn's
• 2:11
  Speaker 3: household financial transit financial products with us? And I just
• 2:16
  Speaker 3: don't know if that's a reasonable objective anymore.
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  Speaker 4: And on that too, you think about what banking was
• 2:23
  Speaker 4: I don't know, ten twenty years ago. From a relationship perspective,
• 2:27
  Speaker 4: you know, Barry walk in with your parents and open
• 2:30
  Speaker 4: up a bank account at XYZ Bank or Credit Union
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  Speaker 4: when you're sixteen, seventeen, eighteen years old and that's your
• 2:35
  Speaker 4: primary financial institution because mom and dad have banked there
• 2:39
  Speaker 4: for so long. It was more of a relationship style
• 2:42
  Speaker 4: of being able to establish your banking and your future needs.
• 2:45
  Speaker 4: Like that's just not a thing anymore. I mean, I
• 2:47
  Speaker 4: know we have in branch experiences and people still go
• 2:51
  Speaker 4: to in branch for specific things, but things are more transactional.
• 2:56
  Speaker 4: It's more at your fingertips. You're able to do things
• 2:58
  Speaker 4: on your phone, your tablet, your computer, so and so
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  Speaker 4: for right and people don't desire that type of relationship
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  Speaker 4: that banker. One knows mom and dad will get to
• 3:07
  Speaker 4: know me, experience my journey through college and into the
• 3:10
  Speaker 4: workforce and marriage and kids and all that stuff. They
• 3:13
  Speaker 4: just want to click and open it. And then you
• 3:15
  Speaker 4: think about the advancement of search engines. I mean, aside
• 3:17
  Speaker 4: from Google Chat, GPT, you can go in and say
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  Speaker 4: I want a bank account that offers this, and you
• 3:23
  Speaker 4: get an output right away. You click some buttons and bam,
• 3:26
  Speaker 4: you have a deposit account. So I think it's just
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  Speaker 4: the landscape has change of you know, becoming members or
• 3:32
  Speaker 4: becoming a customer of a bank, Like, there's way more
• 3:35
  Speaker 4: at your fingertips to be able.
• 3:36
  Speaker 3: To do that, right except the SEG based credit us right. So,
• 3:41
  Speaker 3: I think the SEG based creditings still have a unique
• 3:44
  Speaker 3: place in our industry, and God bless them that they
• 3:49
  Speaker 3: still have the ability to bring in those brand new
• 3:51
  Speaker 3: employees from whatever company that is that they're affiliated with,
• 3:56
  Speaker 3: and even in the onboarding of those new employees for
• 3:59
  Speaker 3: XYZ the company, now we can actually sign them up
• 4:03
  Speaker 3: as a member of the credit union and then try
• 4:05
  Speaker 3: and deepen that relationship from there. So I think they've
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  Speaker 3: still got that value in the marketplace. But there's less
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  Speaker 3: and less of those SEG based credit unions as well.
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  Speaker 3: If they were too small or can't necessarily grow, they
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  Speaker 3: may end up merging with or larger credit unions. And
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  Speaker 3: there's not a lot of new SEG based credit unis
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  Speaker 3: that are being established in our marketplace, not like there
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  Speaker 3: was fifty years ago or eighty years ago.
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  Speaker 2: As a case, maybe.
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  Speaker 4: Great point too, and SEG based strategy is a great strategy,
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  Speaker 4: and it worked for credit unions for a very very
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  Speaker 4: long time, and still in a sense does. But you
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  Speaker 4: think about the seg base, whether it's this electrical union
• 4:43
  Speaker 4: or this other type of utility, utility or something of
• 4:47
  Speaker 4: that nature, that is more of a dying breed right there.
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  Speaker 4: Unions have become much less in the US that they
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  Speaker 4: were fifty or so years ago. That if that is
• 4:55
  Speaker 4: your sole strategy getting growth from a membership perspective. And
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  Speaker 4: then going back to my my prior point, if you're
• 5:01
  Speaker 4: going to go sit at someone's place of employment and
• 5:03
  Speaker 4: offer we have this depository account that yields X y
• 5:07
  Speaker 4: Z or all of these different things that come with
• 5:09
  Speaker 4: your checking account. Am I going to up and leave
• 5:12
  Speaker 4: my primary financial institution because Barry Lynn is sitting at
• 5:17
  Speaker 4: my workplace and here's all these attractive offers. Probably not true.
• 5:21
  Speaker 1: And I think it is a lot easier too. I mean,
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  Speaker 1: Barry you kind of called it out like you may
• 5:25
  Speaker 1: not want to have all of your kind of share
• 5:29
  Speaker 1: a wallet at one place anymore. It's easy enough now
• 5:32
  Speaker 1: to have multiple apps on your phone. They all instantly
• 5:34
  Speaker 1: log in when you with your face when you look
• 5:37
  Speaker 1: at them. It's not like you really have to manage
• 5:39
  Speaker 1: multiple relationships per se if you don't want to, because
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  Speaker 1: you can just open a couple apps. They are all
• 5:44
  Speaker 1: grouped together in a banking folder on your phone, and
• 5:47
  Speaker 1: it's not the friction's not there for the consumer.
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  Speaker 4: So and it's now easy. If I have three different
• 5:53
  Speaker 4: depository accounts across three different credit unions, and I want
• 5:56
  Speaker 4: to transfer from Credit Union AD to Credit Union C
• 5:58
  Speaker 4: for whatever's going on in my life, that fast, right.
• 6:02
  Speaker 2: Sure, great point. You don't have to drive to three
• 6:03
  Speaker 2: different branches.
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  Speaker 1: Right, yeah, exactly, or wait on mailing a check in
• 6:08
  Speaker 1: the most case. So that's actually a good kind of
• 6:11
  Speaker 1: gets into the next thing I want to talk about
• 6:14
  Speaker 1: is just the value then those fintech partnerships. So a
• 6:16
  Speaker 1: lot of that that you know, credit Union to credit
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  Speaker 1: Union or bank to bank transfers facilitated through various kind
• 6:22
  Speaker 1: of open banking tools that have developed over the years.
• 6:26
  Speaker 1: How can fintech partnerships help drive that member retention and
• 6:28
  Speaker 1: drive that attraction and awareness of credit unions?
• 6:31
  Speaker 4: Well, I think the number one is that at the
• 6:34
  Speaker 4: front end most credit unions they don't have the tech
• 6:38
  Speaker 4: stack or the resource to support these digital experiences. That
• 6:42
  Speaker 4: everyone wants today, right, they have it, but it's a
• 6:45
  Speaker 4: clunky type of experience. So I think having fintech partnerships
• 6:50
  Speaker 4: offer the digital experience, offer the journey, whatever you want
• 6:53
  Speaker 4: to call it. They're going to have to partner with
• 6:55
  Speaker 4: FinTechs to deliver that. Now. On the back end, I
• 6:58
  Speaker 4: think FinTechs can also help with creating more core members
• 7:02
  Speaker 4: or deepen those member relationships because they came through their
• 7:05
  Speaker 4: channel with this you know, for lack of a better term,
• 7:08
  Speaker 4: sexy experience that the borrow or borrow or the member
• 7:13
  Speaker 4: kind of remembers that right, and then they're going to
• 7:16
  Speaker 4: stick with them and potentially be a PFI type of member.
• 7:19
  Speaker 3: Yeah, that first experience is so important, I think. And
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  Speaker 3: if you're partnering with the fintech that has a really
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  Speaker 3: rich and easy to handle a first impression on a
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  Speaker 3: digital platform, what a great introduction to the crediting that
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  Speaker 3: is now that members expectations now are high that you're
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  Speaker 3: going to have the same sort of a rich digital
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  Speaker 3: proposition that your fintech partner has, So you know, if anything,
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  Speaker 3: it sort of makes everyone have to step up their
• 7:54
  Speaker 3: game a little bit in terms of that user experience,
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  Speaker 3: the clunkiness of moving from sort of once to another
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  Speaker 3: if it's on isso for example, I'm going back to
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  Speaker 3: my old crediting days where we want to own that
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  Speaker 3: whole experience for that member digitally, but it was so
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  Speaker 3: hard to do it if you didn't have the ability
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  Speaker 3: to do Sso between different systems.
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  Speaker 1: And so on all of our listeners, I'm sure in
• 8:19
  Speaker 1: both of you there's this idea and true in a
• 8:25
  Speaker 1: lot of ways. I think founded by a lot of
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  Speaker 1: reality that indirect lending does not lead to long term numbers,
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  Speaker 1: and that that's a kind of a transaction, and then
• 8:33
  Speaker 1: it's hard, if not impossible, to build that. And according
• 8:36
  Speaker 1: to a Pinwheel study earlier this year, seventy percent of
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  Speaker 1: newly open accounts go inactive in the first ninety days,
• 8:43
  Speaker 1: so seventy percent. So you're spending the time and money
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  Speaker 1: and you know KYC to open up that account and
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  Speaker 1: then it goes inactive without kind of an anchor option.
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  Speaker 1: And I think part of that is the difficulty of
• 8:54
  Speaker 1: doing things like switching direct deposits, switching bill pay and
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  Speaker 1: that just inertia that people have a lot to do,
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  Speaker 1: and that's kind of the last thing on their list.
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  Speaker 1: So how do you think about that, How do you
• 9:05
  Speaker 1: think about this kind of indirect lending. Get this new consumer,
• 9:07
  Speaker 1: get this new member, and drive it to become even
• 9:11
  Speaker 1: if not maybe like the full wallet share like part
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  Speaker 1: of that and getting a meaningful part that makes that
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  Speaker 1: a more economically attractive new member.
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  Speaker 4: I've heard that very I'm sure you've heard that same
• 9:23
  Speaker 4: concept of getting an indirect member to become a core
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  Speaker 4: member or a primary financial institution is something that just
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  Speaker 4: can't happen. And I'm going to disagree with that, and
• 9:33
  Speaker 4: reason because is you have multiple credit unions that play
• 9:37
  Speaker 4: in the indirect space. They're very good at driving automobile
• 9:41
  Speaker 4: loans to their balance sheet right, and they're getting a member.
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  Speaker 4: But the consumer at the time of being at a
• 9:47
  Speaker 4: dealership cares about one thing, and it's driving the vehicle
• 9:50
  Speaker 4: off the lot that day, and at most times probably
• 9:54
  Speaker 4: not favorable conditions as it relates to APR for probably
• 9:57
  Speaker 4: the payments a little bit out of their general sense
• 9:59
  Speaker 4: of what they wanted to do there. But what happens
• 10:02
  Speaker 4: on the back end, I think is what separates this
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  Speaker 4: actually coming to fruition. Without naming names, we have a
• 10:09
  Speaker 4: lending partner that we partner with here at Upstart, that
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  Speaker 4: is seeing about a ten to fifteen percent conversion rate
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  Speaker 4: on their indirect side because of the amount of touches
• 10:17
  Speaker 4: they're doing after the auto loan comes on to their
• 10:19
  Speaker 4: balance sheet. And I don't know if that's a secret
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  Speaker 4: sauce of on the day, three day, seven day fifteen.
• 10:26
  Speaker 4: And then another thing that is attractive is you have
• 10:28
  Speaker 4: to incent them just because the institution provides an apy
• 10:33
  Speaker 4: of X or you're able to use your debit card
• 10:36
  Speaker 4: at wherever you want for free. If you have some
• 10:40
  Speaker 4: form of an incentive, then bringing in those members to
• 10:44
  Speaker 4: become core members and not having them close their account
• 10:46
  Speaker 4: out within ninety ninety days that you alluded to, you're
• 10:49
  Speaker 4: going to see higher conversion rates.
• 10:50
  Speaker 1: Yeah. I think incentive incentives are really important, and I like,
• 10:54
  Speaker 1: if you would look at my personal wallet, I have
• 10:56
  Speaker 1: more probably a higher number of credit cards that you
• 10:58
  Speaker 1: would think I would because I love incentives. I've got
• 11:01
  Speaker 1: an Amazon Prime one, I use my American Express for travel.
• 11:04
  Speaker 1: I have very fit for purpose cards that I use
• 11:06
  Speaker 1: for very specific things. Or maybe I get a six
• 11:09
  Speaker 1: month no interest on this and then I'll pay it
• 11:11
  Speaker 1: off before that time. So like those things are for
• 11:14
  Speaker 1: people who want to use those rewards, those can be
• 11:17
  Speaker 1: super beatingful.
• 11:18
  Speaker 3: Sorry you mentioned about onboarding. So multiple touch points through
• 11:22
  Speaker 3: probably multiple different methods, right, Some might be an email,
• 11:27
  Speaker 3: some might be a text, some might be you know,
• 11:29
  Speaker 3: an actual letter that shows up in someone's mail. It
• 11:31
  Speaker 3: mighte be a phone call depending on all the above.
• 11:34
  Speaker 4: And then to take it even a step further is
• 11:37
  Speaker 4: just because Linn walks into a dealership and buys a
• 11:41
  Speaker 4: specific type of vehicle and Barry walks into a different dealership,
• 11:45
  Speaker 4: there's different personas everyone's at a different stage in their life.
• 11:48
  Speaker 4: You have to take it a deep step further and
• 11:50
  Speaker 4: have different campaigns, different touch points, different touch points, But
• 11:54
  Speaker 4: what is your incentive offering to the person at that
• 11:57
  Speaker 4: point in time in their life. And there's so much
• 11:59
  Speaker 4: data that's your fingertips that you're able to create the
• 12:03
  Speaker 4: messaging around that point in their life, whether it's through
• 12:06
  Speaker 4: looking through their credit reporting agency, you're able to see
• 12:09
  Speaker 4: the income kind of based on everything that's come through
• 12:12
  Speaker 4: from underwriting perspective to tailor your messaging to become or
• 12:16
  Speaker 4: to get people to become more core members.
• 12:18
  Speaker 3: I'm going to take your seventy percent stat and I'll
• 12:20
  Speaker 3: turn it around, say, how about thirty percent actually don't
• 12:23
  Speaker 3: close your account or aren't inactive in the first ninety
• 12:26
  Speaker 3: days anyone go fishing before. I mean, if you've got
• 12:29
  Speaker 3: thirty percent of your cast had some sort of a bite,
• 12:31
  Speaker 3: you'd be out there every day. Right, I quit my
• 12:33
  Speaker 3: job and just be a full time fishing So you know,
• 12:36
  Speaker 3: there's an opportunity there that I think is somewhat lost.
• 12:38
  Speaker 2: We tend to focus.
• 12:39
  Speaker 3: On the negatives of it, of all ninety percent or
• 12:42
  Speaker 3: never going to be Well, what about that ten or
• 12:44
  Speaker 3: twenty or thirty you know, ten to fifteen percent? It
• 12:48
  Speaker 3: is a lot, It really is and can be meaningful.
• 12:50
  Speaker 3: So part of that is the cost of doing business.
• 12:53
  Speaker 3: You know you're going to cast out and you're not
• 12:55
  Speaker 3: going to get any bites at all, Okay, but you
• 12:57
  Speaker 3: will get at least in this case, ten to fifteen percent.
• 13:01
  Speaker 3: One of my credit unis that I led We actually
• 13:04
  Speaker 3: had about a thirty percent take up rate on the
• 13:07
  Speaker 3: second or third product or service on an indirect auto relationship.
• 13:10
  Speaker 3: Now that was with This was ten fifteen years ago
• 13:13
  Speaker 3: when people still answered their phones, So you know, we
• 13:16
  Speaker 3: could we would be calls right and we would make
• 13:19
  Speaker 3: outbound calls. And it was local because there were local
• 13:22
  Speaker 3: auto dealers kind of up and down close to you know,
• 13:25
  Speaker 3: within like a three or five mile radius of where
• 13:27
  Speaker 3: branches were, and they're like, oh, yeah, we know your
• 13:30
  Speaker 3: credit union. We see your signs all over town all
• 13:32
  Speaker 3: the time, and oh okay, oh you've got this offer.
• 13:35
  Speaker 3: So it had to have an incentive behind it. It
• 13:37
  Speaker 3: wasn't just yeah, I'm going to open a checking account
• 13:39
  Speaker 3: just because you're down the street. It was all open
• 13:40
  Speaker 3: a check account because I'm going to get that two
• 13:42
  Speaker 3: hundred dollars bonus, or I'm going to get you know,
• 13:44
  Speaker 3: maybe a discount on my on my auto loan for
• 13:48
  Speaker 3: auto pay things like that. So there was a compelling
• 13:50
  Speaker 3: reason to do it. But I think we need to
• 13:54
  Speaker 3: focus I think creditings you need to focus on sort
• 13:56
  Speaker 3: of the positive aspects of this and be a little
• 13:58
  Speaker 3: more optimistic. Now I'm always a gold last half full guy,
• 14:01
  Speaker 3: but you know, I think maybe our marketing teams it
• 14:04
  Speaker 3: can be it can feel like it's it's it's a
• 14:08
  Speaker 3: really hard uphill climb, especially if you're just not gain
• 14:12
  Speaker 3: a whole lot of take up, then maybe try something
• 14:14
  Speaker 3: different you know, try a different incentive, try a different
• 14:17
  Speaker 3: method to try and get that second or third product.
• 14:19
  Speaker 4: And understand of that thirty percent, why did they stay
• 14:23
  Speaker 4: with you? Are they transactional? Are they exploring other product
• 14:27
  Speaker 4: offerings that you are sending them, or just organically coming
• 14:30
  Speaker 4: to your site and researching refinance of a mortgage or
• 14:35
  Speaker 4: a credit card, like you have your fingertips at being
• 14:38
  Speaker 4: able to access all of that data.
• 14:39
  Speaker 1: Yeah, I think we're going to get bury some upstart
• 14:42
  Speaker 1: branded trut waiters to for your next I'm all.
• 14:45
  Speaker 2: Fortunate for you.
• 14:47
  Speaker 4: Are you a ten percent or less or ten percent
• 14:49
  Speaker 4: or higher fisherman?
• 14:52
  Speaker 2: No comment?
• 14:55
  Speaker 1: Now, I think I think the personalization pieces is really
• 14:58
  Speaker 1: interesting to think about and and you know, getting very
• 15:02
  Speaker 1: specific on what those offers are, but also brand awareness
• 15:05
  Speaker 1: and that AI tools of course can drive that hyper personalization.
• 15:09
  Speaker 1: So you know what, do you think some other uh
• 15:12
  Speaker 1: maybe ideas are around how both credit unions can can
• 15:15
  Speaker 1: use that personalization to target members and really build that
• 15:19
  Speaker 1: member loyalty, like really drive that from being a transactional
• 15:23
  Speaker 1: one product to having a more kind of multi product,
• 15:26
  Speaker 1: longer term relationship with a new member.
• 15:28
  Speaker 3: Yeah, I'll go back to the SEG comment before and
• 15:31
  Speaker 3: lean into that. And you know, if you're if you're
• 15:33
  Speaker 3: primarily a SEG based credit union, you've got some community
• 15:37
  Speaker 3: aspect to your membership, your field of membership. That's okay,
• 15:40
  Speaker 3: but lean into that heritage of that company you have.
• 15:44
  Speaker 3: And if you're just purely more of a community based
• 15:46
  Speaker 3: UH or organizational institution, then you're going to have to
• 15:50
  Speaker 3: find something that's going to be meaningful and compelling for
• 15:54
  Speaker 3: those new members. So how did how these members come
• 15:57
  Speaker 3: to us? Was it through some sort of a digital
• 15:59
  Speaker 3: channel purely? Well, then there's a connotation there that I'm
• 16:02
  Speaker 3: probably they're probably going to want to transact with you digitally,
• 16:06
  Speaker 3: and so sending a letter to their home may not
• 16:10
  Speaker 3: necessarily work because they're all digital, right, and in a
• 16:14
  Speaker 3: text that that member is probably going to be more
• 16:17
  Speaker 3: amenable to. That's sort of an approach than another one.
• 16:20
  Speaker 2: What do you think, duth I'm going to.
• 16:22
  Speaker 4: Go a different direction here and be of course biased
• 16:25
  Speaker 4: it's being an upstart hosted podcast, but you think about
• 16:29
  Speaker 4: what I was talking about a little bit ago, is
• 16:32
  Speaker 4: the person is coming to a dealership to get a vehicle.
• 16:35
  Speaker 4: That's all they care about. If you don't have anything
• 16:37
  Speaker 4: overlaid in that experience that gives them the incentive to
• 16:41
  Speaker 4: become a more core member to your credit union, then
• 16:44
  Speaker 4: they're going to probably drop off and be a part
• 16:46
  Speaker 4: of that thirty percent that you're talking about. So if
• 16:49
  Speaker 4: you're able to I don't know how you solve this
• 16:51
  Speaker 4: in the dealership, but have your incentive offering in front
• 16:54
  Speaker 4: of the member while they're in the in the dealership,
• 16:58
  Speaker 4: the conversion ratio is probably going to go up.
• 17:00
  Speaker 2: Right, incentive is rate sort of win exactly.
• 17:05
  Speaker 4: But at the end of the day, they don't care
• 17:07
  Speaker 4: about their rate, right, they care about driving the vehicle
• 17:10
  Speaker 4: off the lot and they want to get it home
• 17:12
  Speaker 4: and then they'll they'll figure out they'll figure out all
• 17:14
  Speaker 4: of the rest later. But if there was some type
• 17:16
  Speaker 4: of incentive in the dealership of I mean, we've all
• 17:20
  Speaker 4: sat there. You qualify for membership with X y Z
• 17:23
  Speaker 4: credit Union, they approve you. If you were able to
• 17:26
  Speaker 4: show some type of an incentive in that exact same experience,
• 17:29
  Speaker 4: that might trigger them to think, you know what, I
• 17:33
  Speaker 4: might want to check this out. And if the offering
• 17:35
  Speaker 4: is rich enough, then it makes even more sense. So
• 17:38
  Speaker 4: why I say all of this is we've seen. We
• 17:40
  Speaker 4: actually offer something at upstart called member cross sell. Both
• 17:43
  Speaker 4: of you of course know about member cross sell. Is
• 17:45
  Speaker 4: we have a similar flow, not for indirect channels, but
• 17:50
  Speaker 4: our an applicant comes to upstart dot com, goes through
• 17:52
  Speaker 4: their personal loan, auto refinance and or helock experience, and
• 17:57
  Speaker 4: we partner these individuals with our lending part partners. We
• 18:00
  Speaker 4: have now been able to overlay this cross sell perspective
• 18:04
  Speaker 4: called member cross seal with our credit union partners, creating
• 18:08
  Speaker 4: the messaging, creating the incentive based on personas and things
• 18:12
  Speaker 4: of that nature, that while they're captured in the experience
• 18:15
  Speaker 4: right now, they are able to see an offering that
• 18:18
  Speaker 4: could help increase conversions. So again going back to they
• 18:21
  Speaker 4: came into the upstar platform caring about a personal auto
• 18:24
  Speaker 4: or helock loan, but also at the back end, you're
• 18:27
  Speaker 4: now being presented a specific type of offering and it's
• 18:30
  Speaker 4: right there when they need money the most.
• 18:32
  Speaker 1: And I think about over you know, the course of
• 18:35
  Speaker 1: kind of my adult lifetime, like in banking for for decades,
• 18:39
  Speaker 1: I think the only time that that's ever that sort
• 18:41
  Speaker 1: of offers been presented to me very infrequently, So I
• 18:45
  Speaker 1: think you just don't see it a lot. I think
• 18:47
  Speaker 1: years ago, or you know, mortgages get sold all the time,
• 18:50
  Speaker 1: and our mortgage got sold to a new bank, and
• 18:53
  Speaker 1: then immediately I received a credit card offer and I
• 18:55
  Speaker 1: took it because I said, okay, you know, I'll do
• 18:57
  Speaker 1: the credit card. I'll open it and keep it there.
• 18:59
  Speaker 1: And I'm not even sure. I think I maybe used
• 19:01
  Speaker 1: it a little bit, but I can think about that.
• 19:04
  Speaker 1: And that was probably fifteen years ago. So it's like,
• 19:06
  Speaker 1: how often do those things are people even trying? And
• 19:09
  Speaker 1: I think buried to your point, if you don't need
• 19:11
  Speaker 1: to get seventy percent of them, can you get a
• 19:13
  Speaker 1: meaningful ten to fifteen percent? Can you make the economics
• 19:16
  Speaker 1: work of what you're offering versus the conversion? So I
• 19:20
  Speaker 1: think you know, as you then, you know, how do
• 19:23
  Speaker 1: we think about credit unions being able to measure success
• 19:27
  Speaker 1: beyond the loan origination? Like how would you advise them
• 19:29
  Speaker 1: to think about like what makes member cross sell effective?
• 19:33
  Speaker 1: What makes it like economically viable and important for spending
• 19:38
  Speaker 1: time and resources on things like that.
• 19:40
  Speaker 3: Yeah, some credit unions have great profitability metrics internally and
• 19:45
  Speaker 3: can sort of make that connection between that new auto
• 19:48
  Speaker 3: loan the next most probable product is this or deeping.
• 19:52
  Speaker 3: This relationship is predicated on gain. Maybe the digital platform
• 19:57
  Speaker 3: gained them.
• 19:58
  Speaker 2: Register for that.
• 20:00
  Speaker 3: And then part of it is how do you make
• 20:01
  Speaker 3: it easy for them? So I can send you a
• 20:04
  Speaker 3: letter and say, you know, click a part of me.
• 20:08
  Speaker 3: You use the QR code to get to a rich
• 20:11
  Speaker 3: solution as opposed to you here, sign this and mail
• 20:14
  Speaker 3: it back just in my self address stamp envelope. I mean,
• 20:16
  Speaker 3: it's very nineteen ninety eight to do it that way,
• 20:18
  Speaker 3: and that just doesn't work anymore. So if you've got
• 20:22
  Speaker 3: those profitability metrics, then I think that that would help
• 20:27
  Speaker 3: you sort of figure out again use efficient analogy. Am
• 20:30
  Speaker 3: I going to cast over here? Am I going to
• 20:31
  Speaker 3: cast over here? Where do I think there may be
• 20:33
  Speaker 3: a bare chance of actually catching?
• 20:35
  Speaker 4: I think each institution is going to have different measurement
• 20:39
  Speaker 4: of success. It could be one additional product. But of
• 20:43
  Speaker 4: that one additional product, which one makes that person more
• 20:47
  Speaker 4: ingrained in transacting with your credit union? It could be mortgaged.
• 20:51
  Speaker 4: It's probably pretty hard to get a mortgage refinance current state,
• 20:54
  Speaker 4: the current state, but if you're able to get something
• 20:57
  Speaker 4: that is part of their livelihood, that is going to
• 21:00
  Speaker 4: keep them with you. That's probably going to be the
• 21:03
  Speaker 4: largest measurement of success.
• 21:05
  Speaker 1: And I do think. I mean, we talked about mobile
• 21:06
  Speaker 1: wallet and kind of share share or mobile apps and
• 21:09
  Speaker 1: share wallet, Like a lot of the technology is getting
• 21:13
  Speaker 1: very similar, so like they're maybe not very differentiated between functionality,
• 21:18
  Speaker 1: Like you kind of expect certain things to always happen
• 21:21
  Speaker 1: digitally now and when you encounter like the paper scenario,
• 21:23
  Speaker 1: which you do still encounter sometimes it is a negative experience.
• 21:26
  Speaker 1: So you know, how how has that like just kind
• 21:30
  Speaker 1: of changing expectations force credit unions to be able to
• 21:36
  Speaker 1: compete and to change their strategies there.
• 21:38
  Speaker 4: Credit unions, no matter if they're large and or smaller
• 21:42
  Speaker 4: in nature from an asset size, they're not ever going
• 21:45
  Speaker 4: to be able to compete with Chase Bank or Wells
• 21:48
  Speaker 4: Fargo or Bank of America and all these large institutions
• 21:51
  Speaker 4: or even the smaller credit unions you're talking about billion
• 21:54
  Speaker 4: dollar asset size competing with the four and five billion
• 21:57
  Speaker 4: dollar asset size. You're going to have to partner in
• 21:59
  Speaker 4: some aspect to be able to do.
• 22:01
  Speaker 2: That right and make sure it works.
• 22:03
  Speaker 3: Like how often do you get frustrated by a bad
• 22:07
  Speaker 3: log in or password or a password or a forced password
• 22:10
  Speaker 3: reset or two factor authentication that doesn't necessarily work all
• 22:14
  Speaker 3: the time. Things like this are things are going to
• 22:17
  Speaker 3: dissuade a new member, a brand new member, who's who's
• 22:21
  Speaker 3: looking at you for perhaps that next product. If there's
• 22:24
  Speaker 3: some aspect of that relationship with pard of me, some
• 22:27
  Speaker 3: aspect of that experience, it's not really going to work
• 22:30
  Speaker 3: for them.
• 22:30
  Speaker 2: You're never going to get them.
• 22:31
  Speaker 1: No, Yeah, So like just reducing friction as much as possible,
• 22:35
  Speaker 1: make it easy, make it a nice experience, delight delight them,
• 22:38
  Speaker 1: don't make them annoyed going through. Well, if this episode
• 22:43
  Speaker 1: helped you rethink membership strategy, subscribe to the show on
• 22:46
  Speaker 1: YouTube and you can watch full video versions and bonus
• 22:49
  Speaker 1: clips you won't hear anywhere else. All Right, it is
• 22:52
  Speaker 1: time for fact and fiction. So we're breaking down real
• 22:55
  Speaker 1: opinions on the industry, deciding if we are on board
• 22:58
  Speaker 1: or not. So, first one, we talked a lot about
• 23:01
  Speaker 1: this about the customer experience factor. Fiction. Onboarding is the
• 23:06
  Speaker 1: single most important member touch point.
• 23:09
  Speaker 3: Fact, fact, wholeheartedly fact. This is your first impression, for
• 23:14
  Speaker 3: a first impression, So and maybe it's not first impression.
• 23:17
  Speaker 3: Drew talked before about an indirector auto relationship, So really
• 23:21
  Speaker 3: that first impression was with the finance manager, not necessarily
• 23:25
  Speaker 3: with the credit union, the financial institution. So this is
• 23:28
  Speaker 3: my first, my first foray into providing you what we
• 23:33
  Speaker 3: are all about and how we are going to help
• 23:35
  Speaker 3: you and support you in your financial journey, whatever that
• 23:38
  Speaker 3: may be. So this is very very important, not just
• 23:41
  Speaker 3: the message that I give, but the method in which
• 23:44
  Speaker 3: I deliver it. And am I putting am I putting
• 23:49
  Speaker 3: expectations out there that I can actually follow up on
• 23:51
  Speaker 3: that I can actually meet. So set that high expectation,
• 23:54
  Speaker 3: but also be sure that you can meet that.
• 23:55
  Speaker 4: And it's not your first one. It has to stay ongoing, right,
• 24:00
  Speaker 4: probably going to drop off from an interest perspective within
• 24:03
  Speaker 4: the first thirty to forty five days if you're not
• 24:05
  Speaker 4: messaging to them on an ongoing cadence and you think
• 24:08
  Speaker 4: about the first real look into your your organization is
• 24:13
  Speaker 4: probably going to be pretty standard across the board for
• 24:15
  Speaker 4: all new members. But then how do you tailor that
• 24:17
  Speaker 4: messaging to be more in benefit or more diverse compared
• 24:22
  Speaker 4: to what they would get from others to get them
• 24:24
  Speaker 4: to be attractive.
• 24:25
  Speaker 2: To stick with you.
• 24:26
  Speaker 1: Yeah, and I think that that welcome and that like
• 24:29
  Speaker 1: the early days, building that relationship building that even brand awareness.
• 24:34
  Speaker 1: So does brand trust matter more than rate competitiveness?
• 24:38
  Speaker 3: I wish this was fact, but I do think it's fiction.
• 24:41
  Speaker 3: And the reason for that is, if I want to
• 24:44
  Speaker 3: find the best CD rate in my market, it's very
• 24:47
  Speaker 3: easy for me to find that with the simple Google
• 24:49
  Speaker 3: search of bankrate dot com or some of the others
• 24:51
  Speaker 3: that are out there.
• 24:52
  Speaker 2: Now.
• 24:52
  Speaker 3: Where the brand trust can come in is if the
• 24:56
  Speaker 3: brand has some if the Credit Union has some sort
• 24:58
  Speaker 3: of a relationship management where I've got other products and
• 25:01
  Speaker 3: I want a CD and you're going to give me
• 25:03
  Speaker 3: twenty five basis points more than the prevailing rate on
• 25:06
  Speaker 3: whatever this term of CD is. Now, there's there's value
• 25:10
  Speaker 3: in me staying with that brand. So I think the
• 25:13
  Speaker 3: more that Credit Unis can lean into the relationship management
• 25:16
  Speaker 3: aspects of it, that's one way to sort of building
• 25:20
  Speaker 3: building those those memory relationships.
• 25:21
  Speaker 1: You know, we talked a lot about that, you know,
• 25:23
  Speaker 1: welcoming the new member, like delighting them, that kind of
• 25:26
  Speaker 1: onboarding experience. But how much does brand trust matter? Does
• 25:31
  Speaker 1: that brand trust and recognition, does that matter more? Than
• 25:33
  Speaker 1: rate competitiveness.
• 25:35
  Speaker 3: I mean, I wish that the brand trust meant more
• 25:38
  Speaker 3: than rate competitiveness. But the reality is, with a simple
• 25:41
  Speaker 3: Google search, I can, for example, find the best CD
• 25:45
  Speaker 3: rate in my marketplace, and it may not necessarily be
• 25:49
  Speaker 3: with my institution, my primary or my credit union.
• 25:52
  Speaker 1: All Right, so we talked a lot about, you know,
• 25:54
  Speaker 1: this idea of delightful member experience, making onboarding feel good.
• 25:58
  Speaker 1: But how much does brand and trust matter and does
• 26:02
  Speaker 1: it matter more than rate competitiveness.
• 26:04
  Speaker 3: I mean, I wish brand trust was the fact, but
• 26:07
  Speaker 3: in reality, rate competitiveness is more of the fact. Nowadays,
• 26:12
  Speaker 3: it's so easy to find, say, the best CD rate
• 26:15
  Speaker 3: in your marketplace with a simple Google search. Now where
• 26:18
  Speaker 3: this becomes meaningful from a brand trust perspective is if
• 26:21
  Speaker 3: your credit union has some sort of a relationship management
• 26:23
  Speaker 3: program where okay, here's our stock CD rate for this
• 26:29
  Speaker 3: certain term, but because you're already a member, or because
• 26:32
  Speaker 3: you've got a certain relationship with us with so many
• 26:33
  Speaker 3: prouty services, we'll give you twenty five basis points more.
• 26:37
  Speaker 3: Now that becomes meaningful for me, and now actually keeps
• 26:40
  Speaker 3: that money with the credit union as supposed to going
• 26:42
  Speaker 3: somewhere else. I think that's where credit unions can win
• 26:44
  Speaker 3: by lean into that relationship management perspective.
• 26:47
  Speaker 4: And they have to. I mean, you think about brand
• 26:48
  Speaker 4: awareness as it relates to credit unions. The knowing of
• 26:52
  Speaker 4: the brand of the multitude of credit unions across the
• 26:55
  Speaker 4: US is not something they're ever really going to know.
• 26:58
  Speaker 4: You see Chase Bank that we've talked about it already
• 27:01
  Speaker 4: there they're blasted all over every single building, every single
• 27:04
  Speaker 4: commercial Credit unions aren't able to put the cost perspective
• 27:07
  Speaker 4: out there to build the brand awareness. So you're going
• 27:09
  Speaker 4: to have to, of course lead with the relationship.
• 27:12
  Speaker 3: Right And I'll turn this around a little bit because personally,
• 27:14
  Speaker 3: I was looking for the best CD rate in my marketplace.
• 27:18
  Speaker 3: I'm in southern California. Well guess what it turned out
• 27:20
  Speaker 3: to be with a credit union that I was not
• 27:22
  Speaker 3: a member of. Now I'm a member of, and now
• 27:24
  Speaker 3: I'm getting their marketing messages. They're sending me offers for
• 27:29
  Speaker 3: heelock and so on and things that I'm now considering them.
• 27:32
  Speaker 3: I haven't taken that second proctice service yet, but there's
• 27:34
  Speaker 3: nothing in that relationship so far that has told me
• 27:38
  Speaker 3: I'm never dealing with these guys anymore. I mean, so
• 27:40
  Speaker 3: it was a really good introduction for a brand new
• 27:43
  Speaker 3: member who now has the potential to become a more
• 27:47
  Speaker 3: valuable member.
• 27:48
  Speaker 4: For that got you thinking, absolutely true, And.
• 27:50
  Speaker 1: I think that that actually kind of leads perfectly into
• 27:53
  Speaker 1: the last factor fiction. I wanted to raise credit unions
• 27:57
  Speaker 1: focus on retention over at acquisition.
• 28:00
  Speaker 4: Yes, I wouldn't even deem this as fact and or fiction.
• 28:07
  Speaker 4: I'll just kind of give a scenario. You want to,
• 28:09
  Speaker 4: of course, keep your existing member base. The credit union
• 28:14
  Speaker 4: member base has been well if mid fifties, low fifties,
• 28:18
  Speaker 4: it's kind of a dying breed as it relates to
• 28:20
  Speaker 4: more members coming in, so you want to be able
• 28:22
  Speaker 4: to retain them. But then from the acquisition perspective, the
• 28:26
  Speaker 4: cost to acquire these individuals is very, very high. And
• 28:30
  Speaker 4: if you're paying I don't know what the dollar amount
• 28:32
  Speaker 4: is to acquire a new member through an indirect channel,
• 28:34
  Speaker 4: and if they don't become a sticky member, if you're
• 28:37
  Speaker 4: putting all of your resource towards retaining, it's probably better
• 28:41
  Speaker 4: for the overall the income statement.
• 28:43
  Speaker 3: Yeah, and you're right, that cost is very depending on
• 28:45
  Speaker 3: the channel which you're acquiring those new members. From you
• 28:48
  Speaker 3: better make sure those members are coming in though, yeah,
• 28:51
  Speaker 3: once are actually desirable for you. And what I mean
• 28:54
  Speaker 3: by that is if it's just purely transactional and you
• 28:57
  Speaker 3: know you've just got this one product for a certain
• 29:00
  Speaker 3: period of time, you better make sure that your expense
• 29:02
  Speaker 3: base on that is low enough that you're going to
• 29:05
  Speaker 3: realize some sort of a profit off of that. Back
• 29:08
  Speaker 3: in the day five six, seven years ago, two ninety
• 29:10
  Speaker 3: nine auto loans for a brand new member coming in,
• 29:12
  Speaker 3: we weren't making a whole lot off of that. I
• 29:14
  Speaker 3: know that, you know, FED funds rates were low and
• 29:17
  Speaker 3: margins were low and so, but that was a pretty
• 29:18
  Speaker 3: skinny margin that even one little loss on that loan
• 29:24
  Speaker 3: on an auto loan was really sort of turing that
• 29:27
  Speaker 3: program economics subside down.
• 29:28
  Speaker 4: You're probably paying more than you were earning an interesting come.
• 29:30
  Speaker 1: I mean in some cases sure, yeah, so you're kind
• 29:32
  Speaker 1: of offering that as like a loss leader to bring
• 29:34
  Speaker 1: them in. And if then you don't get the conversion
• 29:37
  Speaker 1: you want or you have higher losses, that's going to
• 29:39
  Speaker 1: wipe the way.
• 29:39
  Speaker 3: So on sale to sell potato chips, but maybe we
• 29:41
  Speaker 3: weren't selling potato chips because we didn't have the flavor
• 29:44
  Speaker 3: they liked, We didn't have the brand they liked. We
• 29:47
  Speaker 3: didn't have You know, there was some reason that those
• 29:50
  Speaker 3: that second or third product service wasn't really compelling enough
• 29:53
  Speaker 3: for them.
• 29:54
  Speaker 1: Thank you for watching, leaders lending, We'll see you next time.
• 30:01
  Speaker 4: People to us people