For more information: 
Rick Uhlmann 608/231-8940 rick.uhlmann@cunamutual.com
Maripat Blankenheim 608/232-6539 maripat.blankenheim@cunamutual.com

Nov. 13, 2007

Lending Protection a Solution to Shrinking Margins
Revenue Producer Benefits CU and Members, Lending Council Attendees Told  

SAN ANTONIO, Texas – There are options for credit unions to gain a “share-of-wallet” that can result in a win-win for the member and credit union, attendees of the 13th Annual CUNA Lending Council were told Tuesday.

“With shrinking margins, credit unions need to explore every avenue to generate income and there are options available to them,” said Tom Keepers, director, product management, at CUNA Mutual Group. “One in particular that’s a win-win for members and credit unions is loan protection. It’s non-interest income that benefits the credit union and provides value to the member.”

Keepers said consumers are taking on more debt than ever before. “Members have more negative equity today than ever. Loan protection can help a member transition through a difficult time, especially given the high debt levels of many members.”

According to Federal Reserve statistics, total consumer installment and mortgage debt reached $12.6 trillion at mid-year 2007, the highest level ever.

In determining a sound strategy for generating non-interest income, Keepers recommended credit unions follow the four “P’s” of marketing: Product, Price, Place and Promotion. 

“There are many products available to members as part of the lending event, from credit insurance or debt cancellation and vehicle service contracts to emerging products aimed at protecting negative equity,” Keepers said. “In determining which product is the best fit, you need to know your members’ needs and proceed from there.”

Keepers said there is a misconception about pricing elasticity. “Demand doesn’t always go down as price goes up. Members are buying value. It’s a function of how a credit union positions the product.”

The “place,” or channels — face to face, internet, call center, mail and others — depend a lot on a credit union’s value proposition, Keepers said.  “For instance, if you have a high-trust relationship, you may want a lending officer involved. In other cases, the convenience of online lending may be the best avenue.”

Communicating a consistent branding message to staff and members is vital, Keepers added. “It isn’t just about promoting the brand to members. The commitment to the product must be manifested to the staff. Pay attention to the staff and build employees into your marketing plan as an audience.

“Finding an answer to shrinking margins can be a win-win. Members have more debt exposure today than ever before.  They have a need to protect against unforeseen adverse events. That can result in favorable fee income for the credit union, but a value, also, for the member,” Keepers said.

CUNA Mutual Group is the leading provider of financial products and services to credit unions and their members worldwide.  More information on the company is available at www.cunamutual.com.

The CUNA Lending Council is a community of credit union lending professionals dedicated to being the primary source of the best lending practices and educational opportunities in the industry.