Navigating Current Lending Trends

Navigating Current Lending Trends for Growth and Compliance

Following current lending, trends can boost loan applications and approvals. It can also spark new partnerships and provide a competitive edge in a volatile market. Let’s look at navigating current lending trends for growth and compliance; and how they can help your credit union grow.

How do I encourage membership growth?

CUs generally have lower loan rates, higher rates on savings and investment accounts, and fewer fees. While credit unions focus on securing memberships from younger generations, it’s important not to discount lending to small and mid-size businesses.

Due to economic uncertainty, small business owners are forced to seek online lending options. Online lenders are dominating the market with higher percentage approvals and quick funding.

Small businesses are worth the acquisition cost since most will need additional products like checking and savings accounts. A positive CU experience could solidify a long-term client both for business and personal financial needs.

How do I increase equipment loan approvals?

Once you have established relationships with small and mid-size businesses, they will likely need additional loans such as equipment financing. While it’s easy to put a business owner into a box by only recognizing his credit score or actuarial models, that box doesn’t meet the needs of today’s business owner.

Does the owner have collateral? Cash flow? Do they have a good reputation with your CU? All of these factors should also influence loan approval.

By underwriting each equipment loan, you can personalize the experience and collect pertinent data that can help upsell additional products and services.

Take the time to get to know local industries that are seeking loans. Do you understand their equipment needs? Are they able to source new or used equipment?

Establishing genuine care and concern for each business member’s needs can generate referrals and build trust among industries. Running a business in any industry is difficult and understanding the needs and unique financial mistakes can help your CU provide solutions to keep those businesses running without a hitch.

How do I go digital without losing members?

By 2025, it is estimated that over half of tasks currently held by various credit union personnel such as loan officers, tellers, and financial advisors could be automated according to Accenture. Although going digital could save financial institutions billions of dollars, it also affects the ability to provide a human experience, a touchpoint that credit unions rely on.

However, going digital doesn’t have to mean slashing the workforce or giving your members the cold shoulder. For example, OceanFirst Financial in New Jersey retrained its employees to assist digital banking roles.

Even though OceanFirst closed over 1/3 of its branches, through its employee retention efforts and forward-thinking mindset, it was able to keep over 90% of members who banked at the closed branches.

By adopting digital processes, OceanFirst also witnessed an 81% increase in mobile deposits (2019). Investing in retraining their employees not only educates their staff on digital processes but provides growth and sustainability for their coverage area.

Why should I partner with fintech?

As the need for a personalized digital banking experience paralyzes credit unions, fintech can provide the perfect partnership.

Your CU doesn’t have to become fluent in online coding or start from square one. By partnering with fintech companies, credit unions can expand their network of businesses, and simplify the loan process to engage more members at a faster pace.

This strategy is particularly important for CUs that lack manpower and budget in the areas of risk, underwriting, and compliance.

Fintech can also help CUs gather data analysis regarding their potential and current membership. The data measures credit risk allowing the credit union to understand the borrower’s financial behavior before a transaction has commenced.

By using smart credit risk technology, CUs can feel comfortable approving the loan, even if traditionally the borrower may have questionable credit on paper. This is the main avenue fintech uses to speed up loan approvals.

It’s important to choose a fintech early in the game. As fintech gets more established the rates start to increase, which means the cost of partnership can as well. Coronavirus has forced scenarios we have never conceived before. Only being able to communicate via a virtual world is right up fintech’s alley so take advantage of their automation techniques in personal and small business lending.

What’s next for the U.S. economy?

Since 2000, credit union lending as increased in both first mortgage and auto. Totaling $81.6 billion (26.0% of all credit union loans in Q2 2000) and $440 billion in Q2 2019 (41.1%), first mortgages have seen an increase of over 15%. Auto loans have increased too from $123.6 billion in 2000 to $374.4 billion in 2019.

However, 2020 has ushered in a global pandemic, social unrest, and an economic downturn. With all of these factors, it is unlikely that the nation will be as strong economically as it was between 2015-2019. Here are 3 factors that could limit economic growth in the next couple of years.

1. Political Uncertainty

President Trump frequently tweets and according to JP Morgan, those words go way beyond social media banter. JP Morgan nicknamed the tweets the ‘Volfefe Index’ after a confusing 2017 “covfefe” tweet. These specific tweets are showing a significant impact on Treasury yields.

Depending on the content, tweets affect volatility in the market which affects the pricing of options and securities.  As the November election looms, uncertainty in the market is considered commonplace.

2. Low Inflation Rate

A low inflation rate is meant to keep the recovery going. However, when inflation rates are already low, cutting them can make a weak economy weaker.

The probability of an additional 25-basis-point rate cut averaged approximately 87% for contracts expiring between the end of 2019 and September 2020 as found by the Federal Reserve Bank of Atlanta’s market tracker.

3. Future Economic Trends

As a higher ratio of Americans is retiring, the U.S. has seen a slowdown in productivity. Less productivity means less economic growth. This decline of economic growth along with a decline in consumer spending could be problematic for a quick economic recovery.

Even with lending wrapped up in the chaos of economic uncertainty, now is the time to invest in technology and comply with industry regulations to stay competitive. Listening to the needs of your members can help your CU weather economic uncertainties. Here at Oak Tree we follow the lending trends in the credit union industry and are here to help you adapt. What’s your feedback on navigating current lending trends for growth and compliance at your credit union?

New Heights

Humanitarian Highlight 9/24/2020 | New Heights

Humanitarian Highlight 9/24/2020

Welcome back to another #HumanitarianHighlight!! In today’s blog, we have many different credit unions that have contributed many types of actions to help out their communities. We couldn’t be more inspired by all the credit unions mentioned, which have inspired us to also take part in local food drives! So, thank you to all the credit unions taking humanitarianism to new heights!

Belco Community Credit Union

Caring for everyone around their community, Belco Community CU sponsored lunch for 60 students in The Salvation Army Summer Youth Enrichment Program. This is an absolutely incredible gesture. Thank you, Belco Community CU!

Nuvision Credit Union

Nuvision CU has been helping its members maintain financial security as part of their NuvisionCares program, all throughout the COVID crisis. The credit union teamed up with Think Together’s Shalimar Learning Center (an afterschool resource center for students who are from low-income families), to collect non-perishable foods and household items, diapers, and formula for the families who are in the program.

“We collected a large amount of food which benefited over 120 families. Every Nuvision branch participated. Our drop-off locations were also visited by numerous first responders and Costa Mesa Mayor Katrina Foley, who stopped by to bring some canned goods in support of the initiative.

We’re grateful to have been able to assist these families at a time when they need it most. These kids are going to be the next generation of hard workers in our community, and we want to make sure they have everything they need to learn, grow, and build their futures.” Nuvision CU

Also for the members in their Alaska branch, Nuvision was able to donate 3,300 pounds of food and raise $3,000 for the TCL’s Summer Meal Kit Program.

“From July 6th to the 31st, we collected donations at all branch locations. Every family who participated in The Children’s Lunchbox program received two snacks and two dinners per child, along with a pantry box that contains breakfast, lunch, and dinner for four.” Nuvision CU

Read the whole BLOG!

Utilities Employees Credit Union

Let’s give a shout out to the Utilities Employees CU employees for putting together and supplying goodie bags to be delivered to the United Community Services to help out their Unity in the Community event.

“United Community Services is committed to providing quality programs to meet the needs of Berks County residents. With the help of its many partners, UCS is able to offer programs that link individuals to workforce development opportunities reducing the risk of sustained poverty. In addition, UCS provides information and referral for individuals who are not eligible for programs, or need additional assistance…

UCS has gathered resources beneficial to connecting with partners and other agencies for anything ranging from help with the insurance marketplace and/or job searching.” United Community Services

Mass Bay Credit Union

Mass Bay CU took the time to deliver 400 of their backpacks full of school supplies to Francis W. Parker Elementary School! This is such a nice gesture and we are so proud of you all!

Marine Federal Credit Union

How awesome is this?! Marine FCU supplied 350 backpacks that were filled with school supplies to be given out to military children!

McCoy Federal Credit Union

Did someone say special delivery? McCoy FCU’s employees have done a fantastic job in making sure that the students from Lancaster Elementary School had the school supplies they needed before the year started. Way to go #CUfamily!

Coastal Community And Teachers Credit Union

Now, this is just wonderful! The Young Professionals group from the Coastal Community And Teachers Credit Union collected donations and acquired items for The Purple Door nonprofit organization. Outstanding job, everyone!

“The Purple Door is a 501(c)(3) nonprofit organization headquartered in Corpus Christi, Texas. Our agency provides FREE services to victims and survivors of family violence and sexual assault throughout a 12-county region of South Texas. We offer support and empowerment to individuals through safe shelter, non-residential services/programs, and outreach.

All services are confidential and available free of charge to victims and survivors staying at the shelter and those residing elsewhere in the communities we serve.” The Purple Door

Click HERE to learn more!

Hope Credit Union

A blog from their website:

“Netflix Invests $10 Million in HOPE to Build Economic Opportunity in Black Communities

JACKSON, MS – Netflix today announced a $10 million deposit in Hope Credit Union as one of the first investments in a $100 million initiative to build economic opportunity in Black communities. The investment is among the first made by Netflix in financial institutions and other organizations that directly support Black communities in the U.S.

The Netflix investment in HOPE will be in the form of a Transformational Deposit. In each Deep South state served by HOPE, for every dollar in net worth held by white households, Black households hold between ten and twenty cents. Through Transformational Deposits, HOPE imports funds into these capital-starved communities to make business, mortgage, and consumer loans and provide other financial services that build wealth and foster economic mobility. Over the next two years, HOPE estimates the Netflix deposit will support financing to more than 2,500 entrepreneurs, homebuyers, and consumers of color.”

READ THE FULL BLOG HERE!

Thank you for reading this Humanitarian Highlight! Please check out last week’s post, and please do not hesitate to contact us with any questions about our products & services through our email or by phone (800) 537-9598, especially if your credit union needs the best lending documents!

Community Charity Campaign Success

PRESS RELEASE Oak Tree Business Systems, Inc. teamed up with local charities, including the OC Foodbank and the 2020 Community Cup Charity, to give back to the surrounding communities. Credit unions, employees, members, families, and friends were asked to help us in this fight against hunger. Community Charity Campaign Success!

With community support, Oak Tree Business Systems, Inc. donated more than 100 pounds of food and over $300 in online donations to the OC Foodbank. We thank Capstone Federal Credit Union and The Irvine Company for their support.

“The OC Food Bank works with nearly 400 local charities, soup kitchens, and community organizations to end hunger and malnutrition. CAPOC personnel distributes over 23,000 food boxes each month at 55 distribution sites in Orange, Los Angeles, and Riverside Counties. The program provides nutritional assistance to relieve situations of emergency and distress through the provision of food to the poor.”

About Oak Tree Business Systems, Inc.

Now celebrating over 37 years of experience in the Credit Union Industry, Oak Tree is a leading provider of compliant lending documents and forms for credit unions. We provide all types of forms (in all formats), data linking services, training, compliance support, legal opinion letters, marketing services, Spanish forms, preprinted brochures, and documents, as well as web-based forms.

For more information on Oak Tree Business Systems, Inc. please visit the Community Charity Campaign page.

(note: this is an older blog entry and has been edited since originally posted. Community Charity Campaign Success!)

Giving Back

Humanitarian Highlight 9/17/20

Humanitarian Highlight 9/17/20 | Giving Back

It’s that time of the week again…Happy #HumanitarianHighlight day! We are so proud of the credit union community reps who have been out making peoples’ days and giving back to their beloved neighborhoods! Here are just a few credit unions that have continued to show their support for the students, teachers, and community as a whole. Let us know what you think and please tag us if you come across any credit unions that have done their part to create a better environment within their communities! You are all appreciated. The credit union movement is all about giving back, be it to the community or their members.

Freedom Federal Credit Union

Harford County Schools received a donation of 6,000 face masks for teachers and staff for the upcoming school year thanks to Freedom Federal Credit Union. They also donated dozens of no-contact thermometers for use in every school building and office. Even though the school year will start off virtually, the hope is to bring students and staff back into the classroom after the first semester.

Blue Federal Credit Union

Living out Blue’s ‘Do Good’ spirit, Blue FCU partnered with nine community-centric non-profits to turn the $100,000 from Blue FCU and $100,000 from Blue Foundation into over half a million dollars by letting the non-profits’ own fundraising efforts be matched. Amazing job, BFCU!

Straits Area Federal Credit Union

After being heavily damaged in a severe storm a few months ago, the Straits Area Federal Credit Union has been helping the Bishop Baraga Catholic School with their fundraising efforts and will be matching $5,000. “We are very grateful for all the donations that we have gotten, and it just shows when something happens in the community we pull together and help,” said Cindy Harrison, President & CEO of Straits Area Federal Credit Union. The credit union is also taking book donations to help rebuild the library completely damaged in the storm.

FAST Federal Credit Union

FAST Federal Credit Union is stepping up in a big way by donating $20,000 to small businesses in Kings County. FAST Federal Credit Union will be donating $20,000 to those small businesses. Paula Lehn, the CEO, said she wanted to do something to help during these trying times.

Grasslands Federal Credit Union

Grasslands Federal Credit Union has donated more than $25,000 to help local non-profits with funds generated from processing fees tied to the federal Paycheck Protection Program. “Non-profits have been hit hard during COVID-19 due to the cancelation of fundraisers and annual events that typically fund their mission’s efforts,” said Emily Guldborg, manager and CEO of Grasslands FCU. “With the credit union philosophy of ‘people helping people in mind, we wanted to do our part to bridge the gap and give back to the communities that have long supported us. We hope to inspire other members of the community to continue reaching out to help one another during this critical time.”

Direct Federal Credit Union

As part of the credit union’s initial response to COVID-19, Direct Federal rewarded and recognized selfless, hardworking, and compassionate individuals throughout Norfolk and Middlesex Counties. During a time of increased financial hardship, the credit union wanted to spread kindness by setting aside $10,000 for deserving individuals. The credit union selected 23 winners and was so moved by one of the nominators, they rewarded her as well. In total, Direct Federal distributed $11,000. The nominators of each winner assisted in the coordination of surprise presentations during the months of June and July.

Pelican State Credit Union

Pelican State Credit Union granted a total of $15,000 to college-bound high school graduates in recognition of their outstanding academic achievements and community service efforts. 2020 marks the 13th year the credit union has been investing in the future leaders of its local communities through its Team Pelican Scholarship Program. Scholarships in the amount of $1,000 were awarded to one member from each of Pelican’s 11 branch parishes, as well as one out-of-state member and a relative of a Pelican team member. The credit union also awarded two $1,000 awards designed for students who excelled in areas outside of their scholastic accomplishments.

Thank you for reading this Humanitarian Highlight! Please check out last week’s post, and please do not hesitate to contact us with any questions about our products & services through our email or by phone (800) 537-9598, especially if your credit union needs the best lending documents!

Community Charity Campaign

Helpful Humanitarians | Credit Union partner

Helpful Humanitarians

PRESS RELEASE Oak Tree Business Systems, Inc. is teaming up with local charities, including the OC Foodbank and the 2020 Community Cup Charity, to give back to the surrounding communities. We are asking credit unions, employees, members, families, and friends to help us in this fight against hunger. To join our team, please email us; the deadline to sign up is Aug. 28. The project will run from Aug. 1–Sep. 11, and those who wish to participate will be asked to leave out marked bins at their branches to collect donations. (Note: this community charity campaign is now over)

This is a great opportunity for your credit union and credit union family to get involved and help those in your community even further, virtually and physically during COVID-19.

“The OC Food Bank works with nearly 400 local charities, soup kitchens, and community organizations to end hunger and malnutrition. CAPOC personnel distributes over 23,000 food boxes each month at 55 distribution sites in Orange, Los Angeles, and Riverside Counties. The program provides nutritional assistance to relieve situations of emergency and distress through the provision of food to the poor.”

About Oak Tree Business Systems, Inc.

Now celebrating over 37 years of experience in the Credit Union Industry, Oak Tree is a leading provider of compliant lending documents and forms for credit unions. We provide all types of forms (in all formats), data linking services, training, compliance support, legal opinion letters, marketing services, Spanish forms, preprinted brochures, and documents, as well as web-based forms.

(note: this is an older blog entry and has been edited since originally posted. The community charity campaign is now complete to great success!)

Credit Unions, We’re Here For You

Credit Unions, We’re Here to Help You Adapt

Credit Unions, We’re Here to Help You Adapt

The current situations are new and can be troubling for many. Almost every person has been affected in some way by the impact of COVID-19. Being a part of the #CreditUnionMovement means we are going to need to be ready to act. Your members are going to be needing all kinds of assistance. Your credit unions thrive during these times because you know how important your members are. This is why we wanted to remind the credit unions, we’re here for you to adapt. It can be to the Covid situation, after the pandemic and the “new” normal, or at any time you want to improve your credit union forms and budgets.

When the pandemic first began its spread, we saw that many credit unions were quick to act in efforts to protect and help their members. There were halts to fees, repossessions, and foreclosures. We saw credit unions lower their rates on emergency loans and perform other actions to prepare their members for the days ahead. Oak Tree had also put forth many resources to assist the credit unions in their mission to support their members.

Now, we are seeing another stage in this situation where many communities are confident in their ability to reopen their businesses and allow for more interactions, with certain safety protocols still in place, of course. That is where Oak Tree is once again acting as a proactive partner to the credit union industry. Along with our standard practice of staying ahead of the trends and regulatory changes, we also want to find other ways to help credit unions adapt to the new normal.

No one is alone in these times, as we are all a community and that is the lesson learned from our time with credit unions. We are here to do our part and help you adapt. As you are ready to transition, see how our forms can better enhance your lending portfolio. Check out our products & services, then contact us to start using the most reliable and compliant forms and disclosures for credit unions nationwide.

Credit Union SWOT Analysis

Credit Union SWOT Analysis

CU Marketing Corner

There comes a time when your credit union might be stuck, not seeing any results or any change. A time when you can take a step back to assess your position to get creative and think outside the box. If your credit union is in this position, wanting to make changes and redirect marketing efforts, the best place to start is the classic SWOT analysis. Even if you have done a credit union SWOT analysis before, it can always be updated. We want to look at Credit Union SWOT Analysis as it applies to your credit union.

This tried, and true exercise offers a way to explore your credit union internally and externally by analyzing strengths, weaknesses, opportunities, and threats. By asking and answering questions that pertain to your credit union and outside competition, you can uncover many pathways of promotional success. Following are the four-quadrant breakdowns and some sample questions to get you started!

Strengths

For any credit union, their strength comes from their member pool and so this is a good time to look at how much your members trust the company. That is a strength. Being a non-profit also helps give your financial institution some other benefits that can help, especially when it comes to the revenues leveraged from fewer tax obligations than some competition.

Strengths are your credit union’s attributes and abilities that you can utilize in future strategies. These are things that you already possess.

What promotions have been successful?

Does your CU Team have special skills you can utilize in the future? (e.g., education, creativity, networking.)

What does your credit union possess in assets that can be used to your advantage? (e.g., members, branches, community, equipment, technology.)

What competitive benefits make the #CUDifference and put your credit union above the big banks?

Weaknesses

Every credit union starts with a charter and that can restrict your ability to gain more members due to the community you serve. Acknowledging this as a weakness allows you to look for new ways to expand the charter or ability to gain new members. Being a non-profit also means, for many credit unions, that there is less capital for infrastructure or new technology. It will be important to not invest in fads, but be ready to serve your credit union with the fintech it needs to better protect and serve your members.

Weaknesses are areas of your credit union’s operations that can use some work or added attention in order to benefit fully from promotions or campaigns.

What are some aspects of your credit union that can be improved or can use a competitive edge?

Does your credit union need more of a physical asset to succeed?

Is your CUTeam putting their energy and talents toward the wrong direction?

Are you having trouble with branch location or online engagement?

Is your credit union marketing strategy working?

Opportunities

This is where Oak Tree can really help your institution because we offer membership forms that can be used for the next generation of young members eligible to join your credit union. Also, not all credit unions offer small business lending — and if you are one of those credit unions it may be time to see how Oak Tree Commercial and Business Lending Forms can help you.

Opportunities are external factors in your “CUCommunity” that your institution can take advantage of for potential growth and success.

Is there a FOM expansion or more significant market trend that your credit union can take advantage of to promote financial services and grow your membership?

Can your credit union engage in community events and business partnerships to grow awareness and community support?

Is your credit union website ADA compliant?

Is your FOM growing due to regulation changes? Are there increasing numbers and businesses that can apply to your credit union?

Do your current members trust you as their primary financial institution?

Threats

The first threat that all companies must look at is their direct competitors. We’ve all heard some company or CEO claim they “have no competition”, but that is simply untrue. Even if you have 99% of the market share there is always some competition out there, even if they are not a threat yet. For credit unions the threat is usually some bank or other credit union. Today there is also a rise in fintech firms offering the services of other conventional financial institutions and so these must be acknowledged and monitored.

Threats are negative factors that you have no control over and cannot likely change. Always keep account of threats to prepare for speed bumps.

Are competing banks and credit unions expanding in your area?

Is your Credit Union Community economy stable, growing, or declining?

Is your credit union engaged in evolving with fintech and credit union innovation?

And is your Credit Union Community seeing lending rates drop?

Take some time to fully answer the SWOT analysis to start off in a good direction. Knowing where you stand, where you exceed, and what can improve is essential as a strong foundation for building a strategy for growth. Oak Tree can help your credit union analyze, strategize, and optimize. Contact us today for a free consultation.