The 2020 crisis caused by COVID-19 has really thrown members and credit unions into a frazzle. The combination of restricted branch access, employees working from home, the unemployment crisis, and uncertainty of how or when it will end have created a unique situation I doubt credit unions have ever seen.
As they deal with these evolving times credit unions are justifiably concerned about revenue and loan defaults. This has many scrambling to keep revenue in the black by reduce costs, and cutting budgets. However, there are some bright spots. For some credit unions the PPP has brought in revenue, and increase consumer lending in the month of May has been promising. But likely the most profitable opportunity right now may just be the mortgage refi boom.
Capturing the Current Opportunity
To pad the net income column, credit unions have the opportunity to capitalize on the current needs of their members. I don’t mean this in a self-serving way but rather in a way that addresses both the needs of the member as well as those of the credit union. These opportunities provide the window to succeed in this crisis. Credit Unions owe it to both their members and the membership to capture the full opportunity.
The mortgage refinance boom has created unprecedented demand for mortgage products. But the demand has overwhelmed mortgage teams causing two problems. First, many loan requests have fallen through the cracks. And second, credit unions are not proactively engaging members that need to refinance but have not applied. Both represent a lost chance to generate much needed revenue.
To capture this opportunity credit unions should be looking at two solutions. First, they should develop a partnership with a mortgage service provider to assist in their mortgage workflow. This empowers the credit union to expand mortgage processing capacity, allowing the credit union to manage incoming business, and generate new opportunity through proactive sales efforts. And second, they need to utilize employees with excess time capacity.
A few weeks ago, I emailed a credit union contact. Immediately I received an out-of-office response indicating that due to COVID-19 employees are only working part time. I was shocked. While there may have been extenuating circumstances which required this approach, the credit union was missing a significant chance to redirect employees with time on their hands. These employees can easily be repurposed to other departments that are overwhelmed and need help. For example, branch employees could be used by your mortgage team to fill basic, routine needs in your mortgage process and free up your experienced mortgage lenders to do what they do best; bring in more mortgage business.
If there isn’t an ability to process the requests coming in, reaching out to bring in more mortgage business would be crazy, right? However, this is exactly what credit unions should be doing right now.
Simply put, many members are not mortgage experts, and often don’t know what is best for them. Many who should refinance have not. By reaching out proactively to these members, your employees can provide the information they need to see how refinancing can benefit them, and help them move forward.
For example, your credit union can build a lead list that identifies members with mortgages that were financed prior to May of 2019. This likely means their rate is above 4% and would possibly benefit from refinancing right now, if they qualify. With some direction, anyone in the credit union can make this call to refer business to your licensed, mortgage experts because it is simple, and direct.
Shifting the Employee Mindset
A few days ago, I saw a post from a concerned credit union CEO. She had just read a study looking at projected earnings for 4,400 financial institutions under $50 billion in assets. The study predicted that 25% of these FI’s will have negative earnings, 44% will have earnings of less than 50 basis points, and 140 will experience capital levels below 8% by the 4th quarter. Her post read, “It’s time we prepared…”
The fact is, we are not victims of the current situation. There is significant opportunity to be found that will carry us through the financial crisis. However, before we can capture any opportunity, we need to be able to see it.
Mindset is the most valuable resource we have at this time. If each employee in the credit union needs a mindset focused on solutions. Credit unions can promote this kind of mindset in their employees by enlisting them in the cause, and by helping them see their roles at the credit union differently.
A powerful way to do this is by tell the story of their members and showing them how they can make a different in their member’s lives just by paying attention, asking questions, and making suggestions. For example, take time to highlight those members who cut years of their mortgage, or saved tens of thousands in interest. Tell the stories of those members who lowered their payments right now by hundreds, helping them to free money at a difficult time.
As you show employees the impact that your products can have in the lives of members, they will become engaged in selling and in helping. Using the crisis is the perfect catalyst to make that happen.
As credit unions face the challenges of our current economic environment, they can be confident in their ability to grow and still meet, or even exceed, revenue targets. By being strategic in the way credit union utilize employees they can increase the mortgage teams processing capabilities. And by creating an engaging and healthy environment, employees will see the need and become fully engaged in activities that seek to identify sales opportunities, proactively reach out through strategic lead sources, and bring in new business. Doing this will not only improve results now but will carry forward into the future when credit unions get back to “Normal.”
Want to learn more from Nick Brown? Join us for a free webinar “Enabling Your Sales Channels: Keeping the Mortgage Pipeline Full” on July 9th.
This article can be originally viewed on CUES.