RICHARDSON, Texas—As credit unions face mounting pressure on non-interest income, one CU is reporting it has diversified its revenue stream to achieve annual non-interest income growth of 17.89% over last five years.
The $1.5-billion Texans Credit Union is crediting a partnership with SWBC to offer a credit life and credit disability program for the revenue boost. SWBC said what has made the program so successful over the years–31% credit life and 22.55% credit disability product penetration within its membership—can be attributed to the approach Texans takes.
Joan H. Cleveland, president and CEO of SWBC Life Insurance Company, told CUToday.info Texans’ staff offer credit life and credit disability on every loan they make to members. But it’s not that simple, Cleveland added, saying the CU is careful to make sure the products are not pushed toward borrowers, and members make the decision based on their own needs.
“Texans believes in offering the credit insurance products to everyone who takes out a loan from them, and their team are well trained on how credit insurance works,” said Cleveland. “So, the credit union and its team know very well how credit insurance works and they recognize it's a tremendous benefit for members. They also recognize credit insurance is a tremendous benefit to the credit union because it removes some of the default risk.”
Diversifying non-interest income sources has become a greater focus for CUs as interchange and overdraft revenue streams face increasing competitive and regulatory pressure.
“What we find when some credit unions want to talk about increasing their non-interest income is they know they're going to lose some overdraft fees and interchange in the coming years and they consider voluntary protection products as a means to offset future loss of non-interest income,” she said.
‘Smaller Face Amounts’
Cleveland said credit life and credit disability products often mesh well with members’ needs for life insurance.
“Many members cannot afford to buy traditional life insurance products,” she explained. “But they can afford credit life and credit disability due to the smaller face amounts, and these products meet their needs of paying off their debts if they die. Credit disability and credit life programs provide a benefit to many members because otherwise they would not have life insurance at all. The first thing you do is figure out how much you owe and to who and that's what dictates how much life insurance that you buy.”
‘Member Benefit Culture’
Cleveland said SWBC typically sees strong penetration of credit life and credit disability at credit unions when the products are delivered through a “member benefit culture.”
“This has to be driven from the top of the credit union,” explained Cleveland. “This is a culture within the CU that really recognizes how the family is in a much better position if someone passes away or becomes injured when they have credit life and credit disability. They don't have to worry about how they're going to make that auto loan or home equity line or student loan payment, they just move forward and get on with their lives.”
What is critical, too, is letting the member make the decision that’s best for them, understanding the products are being offered as an additional benefit. Cleveland said that can’t be don’t effectively unless staff thoroughly understand the offerings.
SWBC offers quarterly training for CU employees, which Cleveland said is critical.
“Each session is tailored to the needs of the client and their sales staff. There is never a one-size-fits-all mentality when it comes to this critical component of the program,” she said.
SWBC has also sponsored a number of sales contests for the Texans team. “The monetary contest has helped keep their sales staff motivated and focused on the credit life product,” Cleveland said.
Texans CU has recently enhanced its current program by adding funeral concierge service and staff now have the ability to sell credit disability only, without it being attached to credit life.
“Additionally, they have recently added credit involuntary unemployment insurance, providing protection for their members who become unemployed by ensuring their loan payments are made for a set period of time or until they are working again,” Cleveland said.
Easy to Use
Cleveland, noted, too, that the products are easy for members to use.
“It's very easy to submit a claim,” she said. “Members can do it electronically—take a picture of the death certificate and fax it in to us over a secure line or email. However we get the information we will settle the claim quickly and at the member’s discretion.”
Cleveland said the growth of credit life and credit disability at Texans is continuing this year on the same, strong upward trajectory.
“It gets down to a couple things,” said Cleveland. “First, this meets a need for the credit union to help them diversify their non-interest income sources, and, second, to meet the needs of their members. This product works best when it is offered as a member benefit, and when members make the decision for themselves through informed employees. This it really is all about the members.”