Last week, the 2023 myCUmortgage Partner Conference came to a close. This year’s amped up event was full of insights on today’s challenging market and how credit unions are uniquely positioned to capitalize on it through mortgage lending. Many of these insights were delivered by James White, General Manager of Banking at Total Expert, a Gold Sponsor of this year’s event. I thought it would be beneficial for my subscribers to hear from James and learn more about how member life events can drive credit union success. Enjoy!
Inflation isn’t deflating (yet), rates aren’t declining (yet), and consumers aren’t as determined to borrow for major financial decisions (for now). Everything just feels like it’s hovering in zero gravity. That’s just the reality of our current economic situation. But when things slow down, the race to grow and retain your deposits and loan volume heats up.
Credit unions have a responsibility to keep their members financially healthy—no matter what the current market looks like—whether it’s through education and advice or by providing a new product or service. Your goal has always been to deliver great service, and “sell” is often considered a bad word. Your goal now should include support. It’s understandable that your members might be hesitant to spend money they don’t need to spend right now, but if you believe that one of your products will help them reach their goals, it isn’t selling; it is supporting.
Despite high-interest rates, some members may not have the option to wait for the market to turn around before borrowing. Your credit union is uniquely positioned to provide the advice, resources, and expertise they need in these difficult times—building the kind of trust and loyalty that earns members for life.
The best opportunity for modern credit unions to retain and grow their membership is by identifying member life events and then providing the relevant products, services, advice, and education to help them prepare for and navigate these important moments.
Identifying life events
Whether it’s something we’ve planned for and dreamed about for years or something that catches us by surprise, the biggest moments in our lives often come with major financial implications. They’re called “life events” because of how drastically they impact our lives and the choices we make to reach our financial goals, both in the short- and long-term.
Live events can come in many flavors:
- Weddings/divorce
- Birth/adoption
- Injury/illness/death
- College/education planning
- Buying a home/downsizing
- Economic hardships
- Retirement
So, how do you know when a member starts planning for or suddenly experiences a life event? Having the right digital tools to aggregate and interpret data from across your tech stack can help you identify—and even predict—when an opportunity to engage a member about a life event presents itself.
But it’s important to remember that engaging members only AFTER they’ve experienced a life event might be a “too little, too late” scenario that can negatively impact your relationships. Education and proactive communication will help members plan and prepare for both expected and unexpected life events, solidifying your credit union as a true partner that has members’ best interests at heart.
How economic downturns impact life events
While it may seem like economic upheaval has been more frequent and more substantial in recent years, cyclical ups and downs are nothing new in the financial industry. Credit unions have been helping members take advantage of market upswings and navigate the downswings for decades. But in a downturn like we’re currently experiencing, the significance of a major life event is amplified for your members.
Pockets are shallower, and pennies are getting pinched tighter as consumers across the country delay major financial decisions until the market rebounds. But that doesn’t mean you shouldn’t continue to engage your members about life events. This is an opportunity to provide them with helpful advice, education, and resources that help them weather the storm and prepare for when things turn around.
A 2022 report by McKinsey & Company highlights how high costs make daily banking in the U.S. unprofitable while complex lending and wealth growth/protection services continue to produce incredible returns.
Benefits of identifying member life events
While it explicitly references banks, a recent study from Accenture perfectly sums up the problem created when you focus too much on shaping a member’s journey before you understand their goal (i.e., intent):
“Until recently, most banks have focused on creating ‘journeys’ that enable frictionless customer acquisition and cross-selling. This resulted in the creation of experiences that banks believed customers wanted. The reality is that few understood the underlying motivation for a particular customer to purchase a particular product. Their underlying aspiration—their intent—is much more important than their journey. Often, this relates not to a specific financial product but rather a desire to, for example, own their dream home, finance their children’s college tuition, or travel the world. For banks to increase their relevance and effectiveness, they would need to shift from simply knowing basic demographic and financial information about a customer to comprehending their daily life, their aspirations, and their intent behind obtaining certain financial products. One of the easiest ways to determine intent is to identify life events.”
You wouldn’t plan a road trip before knowing where you wanted to end up, so why would you lay out a member’s journey before you know what they want? I’m not saying that journeys aren’t essential pieces of your member engagement strategy; I’m just saying that you need to reassess how you build those journeys. Rather than build them around a specific product you want them to purchase, build them around guiding each member toward a financial goal (e.g., buying a house, saving for college, planning for retirement). If one of your products helps the member get there faster or easier, the opportunity to present that product will reveal itself naturally. This approach will feel more authentic and honest to the member, helping you build trust and loyalty.
Delivering opportunities through data-driven approaches
With the data you’ve collected across your tech stack, opportunities to identify member life events are sitting at your fingertips. You just need the right combination of technology solutions and strategies to segment your membership and engage members as they begin to signal intent.
CU Today published an article that analyzed how Randolph-Brooks Credit Union (RBCU) has surpassed $11.4B in assets. Blake Lyons, vice president of marketing and business development at RBCU said, “We look at our membership data, and we don’t necessarily try to classify people into a generational cohort; we try to look at them based on what is going on in their lives.”
Rather than grouping members into large, generalized buckets based on age, gender, income level, or total assets—look for members who just became parents, got married, or reached a certain equity level in the current home.
This approach might require some additional work from your member-facing teams to stay connected with members, check in about their goals, and develop two-way relationships that help you better understand their needs. But the payoff is being able to proactively identify life events and provide members with the service and support they deserve.
Supporting members during challenging times
As I mentioned earlier, some of your members may not have the option to delay or avoid a major life event. And in a difficult market, that can worsen an already stressful situation. Your members should be able to rely on your credit union for support and guidance in these moments more than any other—it’s what separates you from a nameless, faceless bank.
Explore ways to provide your membership with ongoing educational resources and high-level advice for weathering the current storm and encourage them to reach out if they need more personalized guidance or assistance with financial difficulties. Continue to position yourself as a partner and a resource for them to use whenever they need it.
Summary
Even if the market hasn’t turned the corner (yet), we can all see the light at the end of the tunnel. So, stay positive, stay engaged with your members, and look for authentic opportunities to help them navigate life events of all shapes and sizes. In the long run, your members will remember the people who helped them when they needed it most, not the individual transactions or the names of the products. Prioritize relationships over transactions and watch your membership flourish.
James White, general manager of banking, has over 25 years of experience helping modern depositories grow market share and drive profitability. James’ leadership experience spans strategic planning, product development and delivery, professional services, sales and marketing, and customer success. Having worked with some of the largest banks and credit unions in the world, James believes in the power of an empathetic bank or credit union to create customers and members for life.