LIHUE, Hawaii—Most credit unions could double loan volume with existing membership.
That startling observation was offered to credit union board members as part of an effort to re-think the strategic initiatives of their credit unions and to recognize that marketing dollars might be better targeted at current members (including those with loans elsewhere), rather than looking to new members for new loans.
Bob Dye of Raddon Financial speaking to Volunteer Leadership Institute.
Bob Dye, general manager and COO with Raddon Financial Group, told the Paragon Group’s Volunteer Leadership Institute here that the Paragon Group that one of the metrics that should be on every board of directors’ dashboard is share of wallet.
“Data show that credit unions as an industry have about 23% of members’ share of wallet,” Dye said. “That means that those members have borrowed $77 somewhere else.”
Even the best credit union loan performers, Dye told the meeting, have around 42% of share of wallet, according to Raddon’s research.
“This is a huge opportunity, especially for loan growth,” Dye explained, “because you don’t have to go out and get new members, you just need to get what members already have somewhere else.”
To that end, Dye urged boards to ask themselves three questions:
- Is the ‘Share of Loan Wallet’ on the CU’s strategic scorecard?
- Is ‘financial literacy” for members central to your brand proposition or value? “I think this concept of financial literacy is a great message for members and employees. The message is ‘We care and we are your advocates.’”
- Do you know how much you have saved your members this year by refinancing loans they had elsewhere?
Dye urged board members to understand that their own members are tremendous resources from whom much can be learned, including levels of awareness, satisfaction, service quality, loyalty, share of wallet, why key segments may or may not be bringing the credit union new business, what key segments value most, and more.
Dye’s observations came as part of a larger presentation on the “Attributes of Effective Boards,” which can be found on CUToday.info later this week.