By Ray Birch
SAN ANTONIO—The most important thing credit unions can know right now? Knowing what’s important to their members, according to SWBC.
And credit unions should know one other, thing, too, according to the company: a likely spike in auto repossessions is on its way at the same time there is a shortage of people available to repo cars.
“I think credit unions are struggling now with tight economy, revenue is down and all the (expensive) technology pieces that are required today,” said Wanita Kaupert, SVP product management at SWBC. “Given that backdrop, it becomes even more critical to figure out what's most important to your membership base so you utilize the dollars that you have wisely and effectively.”
Kaupert acknowledged that members have become savvier and are expecting more from their credit unions as they compare their experiences at the CU with what they experience at major retailers.
“Credit unions we see that are successful are doing a lot of work to engage members and understand what their members are expecting—trying to stay ahead of member needs instead of making assumptions,” she said.
As CUToday.info has extensively reported, credit unions, their vendor partners, and even regulators already know all about the “new normal” when it comes to meeting member and potential member needs. This CUToday.info series looks at how credit unions are approaching their planning for 2023 and beyond.
Kaupert believes credit unions of all sizes are becoming more skilled at working with data, including AI, to better know their memberships and the products and services they require.
“They're directing their dollars to where they're needed the most, and we are doing the same here at SWBC,” she said. “We certainly have to consider that ourselves as we head into what appears to be a recession. We are on a very similar journey with credit unions—we have a different type of customer than the credit union member, but the challenge is the same.”
The Price Tag
A big part of that challenge? The big price tag that comes with going digital, Kaupert agreed. She said SWBC has learned through its advisory board of CU leaders that credit unions are conducting membership studies, talking to members at branches, and turning to data analytics to find out what they should be focusing on in 2023 and beyond.
“In their branches they are putting out four to five questions to find out what is really resonating with their members,” Kaupert said. “Each credit union is different. Their membership bases are different. And each has their own struggles. We have seen some credit unions conducting focus group studies.”
All of the data is helping CUs fine tune their path forward and even change it, said Kaupert.
One Discovery
One thing credit unions are finding is that a standard, no-frills checking account is not on a lot of members’ financial services list.
“Members are looking for more value,” she said. “Standard retail checking isn't enough anymore. For example, maybe I can get benefits from my credit union like gap insurance. Maybe I can get insurance that covers my mobile phone, and then I can cancel that coverage with my phone provider and save a little money,” she said. “Those are the kinds of things that credit unions are looking to us for—they want us to creative and find ways they can bring members additional value.”
Wanita Kaupert
An Increase in Skips
Meanwhile, CUs plan for the near term, SWBC said greater attention should also be paid to repossessions.
“We are seeing an increase in skips, those individuals who purchase a vehicle and then skip out on the loan,” explained Kaupert. “They take the vehicle with them and you have to track them down. We've definitely seen an increase here.”
What is making matters worse, contended Kaupert, is repossession agents are in short supply, and she noted that just like many other employers are finding it difficult to keep and attract enough workers, so, too, are repo companies.
“Like everyone else, they are dealing with the labor crunch,” she said. “They can’t find enough people who are willing to go chase down these individuals and repo the vehicles. Many credit unions are finding it difficult to get a car repossessed in a timely manner.”
Kaupert stressed that planning is critical now not only due to financial services changing quickly, but also because risk is rising in the current financial services environment. She noted the possible recession, used car prices that had been rising at record levels, loan terms that have been getting longer and longer, and some CUs reaching to lower credit scores to expand the lending market. She advised CUs to weigh all of these risks carefully as they look forward.
“All of those things are definitely bringing more risk into the picture,” she said.