Since 2010, the credit union membership base has grown faster than the rate of growth in total credit-active consumers in the U.S. At the same time, average debt levels for credit union members have risen across all products. Most importantly, credit union members are performing much better than the rest of the market.
To maintain their strategic growth, credit unions need to measure areas of opportunity, identify drivers of growth in specific markets, and understand changes in credit performance. In a recent TransUnion webinar, I shared where credit unions excel and what expansion opportunities exist.
Here are four opportunities for credit unions.
Capture Untapped Segments of Auto Loans and Leases
Credit unions have aggressively grown their share of the auto finance market. In 2016, there were 151 credit unions originating more than 10,000 auto loans or leases, compared to just 49 credit unions in 2010.
However, credit unions tend to be more risk conservative than their peers. Regional banks originated 30% of auto balances to below prime consumers, compared to just 25% of originations for credit unions.
Credit unions can diversify their portfolio risk by attracting savvy consumers via prescreen offers, or optimize pricing for lower-risk consumers to capture untapped segments.
Identify the 19 Million Card Member Opportunity
Four in 10 (43%) members do not have a credit card with a credit union. These 19 million members present an opportunity for credit unions to capture more market share. Additionally, the risk distribution for these members is primarily concentrated within the prime and above risk tiers.
The credit union members who carry a credit union card use it more than the average bankcard, indicating consumers prefer to utilize credit union cards. Using this insight, credit unions can focus on enhanced product value proposition, specifically for higher credit tiers.
Target First-Time Homebuyers to Accelerate Originations
While credit unions have outpaced industry growth in total mortgage balances, the last 12 months of originations lag the pace of industry growth in originations. Digging deeper into this insight, we found that credit unions lagged in originations within a key consumer segment – first-time homebuyers.
In 2016, 24% of credit union originations were to first-time homebuyers, compared to 35% of non-credit union originations. To proactively attract this very important segment of consumers, credit unions can leverage propensity scores to identify first-time homebuyers almost eight months before they enter the mortgage market.
Continue Positive HELOC Trajectory with Universe Expansion
The gap between household home equity and HELOC credit has grown dramatically since 2009, due to both lack of supply and demand. On the contrary, balance growth for credit unions has been positive in recent years. While outstanding balances for non-credit unions are down 7%, outstanding HELOC balances for credit unions are up 15%.
Over two-thirds of homeowners could be eligible for a HELOC, and their scores skew strongly to the top tier. With access to property data and propensity scores, credit unions can identify a segment of consumers who are likely to open a HELOC.
As credit unions prepare to maintain and potentially accelerate their growth plans in 2018, they need to consider opportunities that may not have been possible to measure before. For more specific credit union market insights, watch the on-demand webinar to learn more about identifying market trends, discovering geographic expansion opportunities and benchmarking against your competitors.