TransUnion strongly believes in credit unions and their mission to serve their members. That's why we're interviewing experts about how credit unions can stand out in an increasingly competitive market. This is the third installment of the series. You can also read our Q&A with Sean Flynn, John Wirth and Jeremy Pinard.
Credit unions have a number of distinctive advantages that differentiate them from FinTechs and other institutions, says Fred Ryerse, Chief Lending Officer of Patriot Federal Credit Union.
In this interview, Ryerse touches on key trends impacting credit unions, examines how they can compete with large lenders, and talks about their technology.
Question 1. What are the key trends impacting credit unions today?
Fred Ryerse: One key trend is not so much about lending, but the need to raise enough deposits. The loan-to-share ratio has gone up pretty substantially at most credit unions, and now we're in the process of raising capital to support that loan growth.
Another trend is evaluating alternative lending sources beyond auto lending. Auto lending has been a big hit for credit unions over a number of years, but at some point that's going to level out. When that time comes, we'll want alternative lending avenues. Credit unions are branching out into business lending and the card space. Finding these other sources and making them robust is one of the key challenges in lending, but right now credit unions are, for the most part, very healthy.
Q2. How can credit unions accelerate their digital lending strategies to meet members' demands for more online and mobile options?
Fred Ryerse: Like most credit unions, we have partners like TransUnion and in the software space. We're pretty good about keeping up with the digital needs of our members.
One thing we did last year was bring our Visa in-house so it would appear on statements and on our online/home banking platforms, and members really took to it. They see the value proposition of having all of their products on one platform through which they can easily move money between accounts.
The other thing we've done is create an online experience where people can start and stop application processes and continue them later. More importantly, members can access the applications from all those different channels.
A lot of the Silicon Valley companies are really small but do really great things. That's how I see credit unions. Some of the credit unions are going to be great technology players. Not because they're big and they have huge technology budgets, but because they're innovative and looking for opportunities.
Q3. Credit unions are facing increased competition from FinTechs and other lenders, so what sets credit unions apart?
Fred Ryerse: Two factors differentiate credit unions from other lenders. First, we have capital. Our source of capital isn't going to dry up because we can always raise deposit money. The FinTechs created their own market and all of us — banks, credit unions, etc. — agree there's a value proposition here.
The other value proposition for credit unions is the fact that we're right there in the communities we're serving. It's true with my credit union and it's true with the 5,000 credit unions that exist across the country.
Q4. What's your perspective on the future of data and analytics for credit unions?
Fred Ryerse: Credit unions are doing a really good job with analytics and catching up very quickly. In the last five years, our ability to drill down into the different nuances of lending has increased tremendously. If I can tell how many B-credit auto loans over 100% we're approving, and how that's trended over time, I can look at my underwriting trends. I can look at my closing trends, and I can dig really deep.
We're in the process of taking that to the next level with predictive technology. This will enable us to do things like predict the next financial services product a person might need or want.
Most credit unions really are catching up rapidly here. Part of it is from partnerships, but part of it's because technology has become so ubiquitous in the industry that there are plenty of ways for us to tap into data.
Q5. What’s the value of digital marketing and how do you use it to reach new members?
Fred Ryerse: We use digital marketing to reach new members by having a constant Facebook and Instagram presence, which is how people communicate with us. Both Facebook and Instagram are great awareness platforms, much like a billboard on a highway when I was younger.
TransUnion enables credit unions to offer more real-time, compelling offers online — without all the risk. Visit our Credit Union page for more ideas.