Wallet share in a credit union measures the rate at which members’ assets (both insured deposits as well as uninsured assets) are retained within the credit union. It shows how members think of their credit union as a source for competitively priced and convenient products. Despite the strong growth in credit union membership numbers (100 million members!), a challenge for the industry continues to be wallet share.
Bill Handel, Senior Vice President of Research at Raddon Financial Group, believes there are several reasons why credit unions have not been successful in growing wallet share. "Credit unions tend to be reactive rather than proactive in regard to member interaction," according to Bill. "This extends all the way down to branch and platform staff who wait for the member to ask for a product or service rather than probing for ways in which the member’s financial situation can be improved."
Innovation at the core of growing members' wallet share
It is imperative for credit unions to investigate new ways to attract new members with innovative products such as mobile banking, but they must not lose focus on building value into their existing products to retain their existing members. Take for example the Quick Loan program that MariSol Credit Union in Arizona launched in order to grow wallet share with members. A growing number of their members were going the route of payday lenders, willing to pay the high interest rates of payday loans because they liked the speed and no-questions-asked aspect of the loans.
Marisol saw they were losing this opportunity with members, and developed the loan program to be funded quickly if the member had a direct deposit account and a job for six months. In addition, Marisol "one-upped" their payday lender competition by requiring the loans be paid back in three months, not one pay period.
Marisol went even one step further to gain even more wallet share by having the loan carry a savings component. "Members will take out the loan for $500, but repay $570 with the $70 going into a savings account, which usually sees them continue in their savings habits," according to Robin Romano, CEO of Marisol. “The thing is, that savings component is one of the most well-liked parts of those loans. That $70 is a big deal for them to attain at the end of the loan period.”
It is creative thinking such as this that credit unions need to apply to their products, based upon the habits of their members. If your credit union membership base does not look for payday loans, but is more apt to seek out creative lending for car loans or home equity lines, using the same innovative thinking can build your wallet share across your member base. Expanding your mobile banking platform to include a mobile lending component is one such example.
Creative lending programs such as these are built directly into the FLEX credit union core technology lending platform.
