By Frank J. Diekmann
Mention the word “payments” to credit unions and the response isn’t a whole lot different from what happens when you use the word “walk” within hearing range of your dog; lots of jumping up and down and tail wagging and sheer-out-of-its-mind-even-though-we-did-this-a-few-hours-ago excitement, but in this case over mobile devices and digital wallets and Apple Pay.
But what about the other “payments,” the payments that are the very core of lending by credit unions, the member’s monthly payments? You can talk Apple Pay, but for the consumer/member it always comes down to “Can I afford to pay for this apple?” The monthly payment, more than rate or automatic deduction or whether the source of funds is a bank or a credit union, remains the Deal or No Deal in both the borrower’s mind and the software that is “decisioning” him or her.
I’ve been to meetings hosted by PSCU, CSCU and CO-OP so far this year, and payments were front and center. You didn’t hear the word as often at last week’s Drive 15 meeting hosted by CU Direct, but it was every bit as present—it’s just that it was the other “payments.” The company announced several initiatives around lending that show that even though it lacks the e-pizazz of other trends, old-fashioned market challenges around credit remain front-and-center; I mean, that is what the union is all about, isn’t it?
As CUToday.info reported here, CU Direct last week announced it has bought a controlling interest in Intuvo, a Scotts Valley, Calif.-based provider of an automated software platform for personalized marketing via email, direct mail and sales force automation.
That purchase is all about what comes after a car-buyer has gotten a payment they like from a lender they might never have heard of, a credit union. The goal is what CU Direct CEO Tony Boutelle referred to during Drive 15 as the “Holy Grail.” It should be noted that the Holy Grail, which has been the subject of 2,000 years of searching and one heckuva good movie, has never been found. Credit unions haven’t been searching for an effective means of turning indirect members into direct, engaged members for as long, although it can seem that way.
“Calling it the Holy Grail tells you how hard it is,” said Boutelle. “Consumers go to an auto dealer for an automobile, not for a financial institution relationship. Credit unions, I think, had some unrealistic expectations about that.”
The latter is a reference to previous attempts with middling success--at best--to reach out to these new “members” and explain to them just what they are members of. That’s where Intuvo comes in. It specializes in very targeted, trigger-based marketing solutions.
“ You already know they bought a car,” said Boutelle. “Did they buy gap or a warranty? The solution is running a hundred algorithms, so you have the intelligence to talk to them. “
That doesn’t mean talking by giving them a call, as credit unions have attempted in the past. “No one answers their phone,” said Boutelle. “But they will open an email if it is targeted effectively. You have the Bureau with every one of these, so you can tee that right up.”
But what about that Grailiest of Holy Grail issues? Can you convey to these folks what a credit union is, and why it’s not just another financial institution?
“Absolutely, you can,” responded Boutelle. “You can tell them ‘You just joined us. Here is what we are.’ It’s drip marketing. You have 30 seconds with an email, 10 seconds with a text, to educate that consumer on who you are. When you think of how people communicate today, this is it. Will there be an 80-% sign up rate? No, but I think it will be at a much higher rate. There is no silver bullet; you have to be realistic. Is there something here that you can do better? Yes. You’re going to have much better results than you have today, short of getting the member back to the branch. Some credit unions are giving a $100 gas gift card if you come into the branch. Short of that, this is the best thing to do, because the acquisition costs are too high.”
A New Beacon
The Intuvo purchase wasn’t the only technology-related news from the CU Direct meeting. The company has also filed for a patent on a new device that uses beacon technology to convey specific, geo-targeted marketing messages to the phones/devices of consumers who have downloaded their credit union’s app. That effort is being led by CU Direct’s Kip Haas, who developed the idea.
Say, for instance, the member is in an auto dealership; they would receive a coupon offering a discount on service or an oil change. The dealer would pay a small fee back to the credit union in those cases.
“We showed it to our dealer council and there was unanimous support,” said Boutelle.
CU Direct has been developing the idea in conjunction with the Filene Research Institute and its i3 group. It’s now seeking a dealership group in a market that has a number of large CUs for a pilot test.
Boutelle said CU Direct is serious about what he called a “cool” technology. While beacons are being used by a number of retailers already, what’s unique about the CU Direct initiative, and it’s where CU Direct is seeking its patent, is the ability to decision a member as soon as they arrive on a car dealer’s lot. Credit unions have long talked about this kind of Holy Grail, the ability to be in front of the member as they are making a decision about a major purchase. At dealers where the CU Direct beacon is installed, the member would get a message that they have been preapproved for a loan.
And I’m guessing that message will let them know the various options for payments.
Frank J. Diekmann is Cooperator in Chief at CUToday.info. He can be reached at Frank@CUToday.info.