Given how quickly the technological landscape is evolving for the financial services, credit unions in particular need to find innovative ways to meet their members’ evolving needs.
In a conversation with host Jim Marous on the Banking Transformed podcast, David Park, vice president and director of loan operations at Franklin Mint Federal Credit Union, shares his insights on how his organization is leveraging data, technology and a member-centric approach to transform its services and enhance member relationships.
Q: What has been the biggest change you’ve seen in the way you deliver services to members in the last five years?
David Park: We have a variety of ways that members receive service from the credit union. We’ve added ITMs to our branch network. Our digital banking continues to evolve and change in the collection space using MeridianLink Collect, which has given the folks who reach out to members and invite them to pay their debt back.
It’s given them confidence that when they’re making a phone call, they’re making a worthwhile call. They’re organized and they’re able to feel good about their day, knowing that they’re not chasing outcomes that probably aren’t going to happen.
Q: How has the credit union adapted its approach to collections and member solutions?
Park: We changed the department that manages non-performing loans; we retitled it from credit solutions to member solutions. Because the desired outcome is meeting the goal of the people who are working on what we’re providing for members, we even split it into separate teams. Some of the folks are pursuing payments. Other folks are pursuing offering workouts to members. We have a whole designated team.
Innovative Credit Products and Member-Centric Approach
Q: Can you tell us about your unsecured line of credit product and how it differs from traditional offerings?
Park: Many folks probably wouldn’t refer to it as being innovative, but it is uncommon where you’re able to borrow money from the credit union, unsecured, without plastic in your wallet, or putting anything into a digital wallet. It’s a traditional unsecured line of credit. And there are a lot of members who like having the opportunity to transfer money back and forth within our digital banking from a line of credit to a checking account or a savings account.
Q: How does this product contribute to member engagement and retention?
Park: The member can decide to use their personal line of credit for overdraft protection or not. It’s totally up to them. And if they choose not to use it for overdraft protection, they still have access to make advances from that line of credit within our online banking and then go right back in and make payments against the balance.
Leveraging Data for Personalized Member Experiences
Q: How do you use data to make credit decisions and manage member relationships?
Park: We run two programs on a regular basis. One’s called Credit Line Asset Management, that’s CLAMP and I think it’s CLIP, Credit Line Increase Program. So, we take data and run it through the entire portfolio. You find a variety of attributes and criteria and memos just go out to members that say, “Congratulations, your credit line’s been increased.” So, as they go on that journey, they exercise their credit.
Q: Can you explain your Credit Line Asset Management (CLAMP) and Credit Line Increase Program (CLIP)?
Park: Six months to a year later, if you wanted to be proactive, you could reapply and try to find more. But annually, your credit limit may increase through the credit line increase program. Conversely, you may find credit line asset management is taking place and you’ll receive a letter that says your line of credit has been revoked.
Q: How does the credit union approach member education, especially when it comes to credit management?
Park: That’s still a member education experience because then the member is going to say, “What can I do to get a line of credit back?” Members can participate in financial education, learn what it means to manage credit, learn how a credit score is built and then pay back a line of credit like a loan. And if they continue to pay that loan back and move their credit score back, they’ll be able to apply for a new line of credit in the future.
Q: What strategies do you employ to help members improve their credit standing?
Park: We’re all about giving members the opportunity to build credit with us. We’re often their first credit offer. And it’s not something like $5,000, it could be $100, $250, $500.
Challenges and Future Developments Facing His Credit Union
Q: What has been the biggest challenge you’ve faced recently in enhancing member relationships?
Park: Efficiency of ability to make payments. In the member solutions department, we are currently in the process of implementing a solution with MeridianLink and SWBC, where members will have the opportunity to cure their default on the phone with an agent using a card from any financial institution.
Q: How do you see payment systems evolving within your credit union?
Park: We’re the first to bring card services into the member interaction space. I would imagine one day it would be great if I could walk into a traditional branch and I could use my digital wallet and tap a deposit.
So, we’re at the very beginning, the earliest stages of digital wallets or card technology being a cash management or cash flow or loan payment tool that members could use however they interact with our credit union.
Building a Culture of Innovation and Member-Centricity
Q: How has the credit union’s culture evolved to support these innovative approaches?
Park: Eventually, we’re going to go from transactional banking to asynchronous dialogue, relational. Our marketing department is great at sending email communication, U.S. mail, postcards. We do a lot of local billboards, radio and local television. We want to move further into sending text messages. So, our marketing department right now is developing a marketing-by-text, way of going about doing what we do.
Q: What advice would you give to other financial institutions that are looking to think creatively about credit?
Park: Find the people with your vendor partners who are responsible for defining how products operate, the desired outcomes they’ll create for clients, and where the changes to those products sit on a roadmap. Then, align your strategic roadmap internally to the roadmap that you have with your vendor partners and collaborate with each other to bring forward the kind of results from members that they want to experience.
For a longer version of this conversation, listen to “Using Data for Credit Management and Financial Wellness”, a podcast with Jim Marous, available here. This Q&A has been edited and condensed for clarity.
Justin Estes is an award-winning writer, strategist, and financial marketing expert with expertise in banking, investments, and fintech. His clients include the NYSE, Franklin Templeton, Credit Karma, Citi and, UBS, and his work has appeared in Forbes, Barrons and ThinkAdvisor as well as The Financial Brand.