July 9, 2024
With so much focus on AI and digital technology, can traditional lending products still drive growth? Absolutely—as long as they’re designed with the member in mind.
Whether you choose to focus on the average credit union member being a little older, or the lack of membership among Millennials and Gen Z, it doesn’t really matter—it’s two sides of the same coin, and both beg the same question: How can credit unions continue to grow in the future?
Of course, adapting to meet consumer demands is nothing new, but the pace of change in today’s financial services environment—driven in large part by a thriving fintech ecosystem—demands a more rigorous approach.
The strategic lending decisions critical to a credit union’s long-term success were a central theme discussed by Richard Wada, chief lending officer at Patelco Credit Union, on a recent episode.
First Things First: Diversify the Loan Portfolio
According to Wada, one of the most critical steps to securing long-term growth is a diversified loan portfolio—one that reflects the members’ needs. This was close to Priority 1 when Wada joined the $10 billion credit union, rooted in the San Francisco Bay area.
“Historically Patelco’s loan portfolio was concentrated in real estate and auto lending, however what our members needed went beyond these two arenas,” says Wada. To address that disparity, Patelco—which welcomed its 500,000th member earlier this year—launched a multi-year strategy to realign their loan portfolio.
“This wasn’t a quick-fix solution,” adds Wada. “It was a strategic, member-focused, future-leaning roadmap to create a more balanced and resilient portfolio. Yes, it spreads risk, but it also provides members with a much larger range of financial products and means we can adapt to whatever the economic cycle will throw our way.”
Next Gen Products to Attract Next Gen Members
As Patelco expanded its loan products, it also did so with an eye on the future—namely, the next generation of members.
“Everyone talks about engaging younger members, but there’s always something that needs energy and investment. For a credit union to do this successfully, they need commitment at the senior leadership level.”
Patelco has benefited from that and is making significant strides into younger markets.
“We’ve made tremendous progress. The average age of our new members is now closer to 40, and a lot of that is driven by our lending products,” says Wada. “Now we’ve made this progress, we’re focused on staying relevant; we can’t take our foot off the gas.”
Promoting Financial Wellbeing
This focus on younger members has dovetailed with Patelco’s commitment to promoting financial wellbeing across its member base. Products like the ScoreUp® Credit Builder have been central to this.
Wada says ScoreUp is indicative of a focus on products that “nurture and encourage” responsible financial behaviors.
“About 65% of our members see improved credit scores within three months,” Wada shares. “We’re helping people improve their finances as much as they use their finances. That builds the kind of brand loyalty that can help a credit union navigate some of the liquidity challenges we’ve faced over the last few years. Members don’t forget it when you’ve helped them out in tangible ways like this.”
All Roads Lead to the Member
Patelco Credit Union’s strategic focus on diversifying its loan portfolio, engaging younger members, and promoting financial wellbeing underscores its commitment to being a truly member-centric organization.
“It’s really all about relevance,” Wada emphasizes. “Member wants and needs are continually changing and it’s our job to adapt and innovate. That’s how credit unions remain competitive and relevant. We must be proactive, and we must be forward-thinking. It’s the only way to succeed in meeting—or even superseding—our members’ expectations.”
Discover how LendKey can help your credit union reach the next generation of members today.