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I recently had the opportunity to sit down with Don Arkell, owner of CU Lending Advice. Don is one of the leading consultants in credit union lending. Don regularly helps credit unions all across the country grow their lending, train their staff and improve their policies.
Below is our Q&A:
The biggest challenge coming into this next cycle is that we have not seen a rising rate environment in many, many years.
We need to focus at the budget level with the members. In other words, their monthly payments and budget. The rate is not going to be the issue. We have to talk to them about affordability. Our message in sales now is around affordability.
We are also going to have to get creative when it comes to income (how and what we are crediting as income); there is a lot more income out there we are not giving people credit for.
Lending training. There is a war for mediocre talent on the front lines.
Credit unions are going to have to retool their back offices to become more efficient. We must figure out how to do more loans with less people.
The market changes. With today’s rate changes, you need to refresh and revive your messaging.
Credit unions also get new staff. Plus, their existing team members need reminders.
As I mentioned, there is a war for talent in the front lines. You constantly need to refresh and revive your lending programs.
The bottom line is, when you invest in loan training your loans grow.
They are the face of the credit union. In fact, we refer to them as the contact center and not the call center. They are the most important channel you have.
The robots are coming. We’ve had 10 years of innovation in just the past year. Credit unions can no longer sit on the sidelines anymore. Automated lending is here to stay. We are not going to have humans underwriting loans in five to ten years.
Approach their entire business from a risk management perspective not risk avoidance.
Robots. Fewer and fewer people will be in the process. Think frictionless.
Humans will have to add value in the sales area.
In the future, getting a car loan will be as easy as ordering a meal on DoorDash.
Interest rate risk. Thinking that the last two years will look like the next five years.
What is going to happen with home values? No one really knows for sure. We are going to find an equilibrium. At some point there will be a natural reset.
For every one percent interest rate hike, five million borrowers fall out of the market. At some point, home values will have to go down.
If you want to grow loans, train your staff or hire an industry thought leader as a speaker, I highly recommend Don Arkell. You can check out his LinkedIn profile here or contact him on his website.