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Auto Finance: Digital is transforming car buying

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Written By: Chris Miller

Credit unions play DEFENSE when they wait for members to fill out an online loan application, come into the branch, or for the dealer to send indirect auto loans. Often, they think that because they have low rates and local service, that members will automatically think of them for their next loan. But members gravitate to convenience. Defensive strategies will lead to a few field goals with minimal touchdowns, making for a difficult post-game review as members gravitate to convenient digital solutions.

Playing OFFENSE is when you use technology, data, marketing, analytics and AI to develop strategies to attract members into your auto lending funnel early in the car buying process.

Virtually every auto-vertical competitor plays offense including dealers, large banks, and internet marketers like Lending Tree. With the consumer shift to “everything digital”, credit unions must develop offensive strategies to “get in the game” early in members’ car buying process, else they’ll fall further and further behind, becoming irrelevant to members’ auto financing needs.

Now we begin to understand the reason credit union auto lending market share is only 18.7% when credit union members represent 37% of the US population. And over 60% of that 18.7%, represents indirect/dealer-generated loans with minimal member engagement. PUT SIMPLY, CREDIT UNIONS HAVE BEEN LATE TO THE DIGITAL GAME WITH OFFENSIVE STRATEGIES, RELYING ON DEE-FENCE ALONE!

It’s time for a “digital” wakeup call to credit unions. Have we forgotten a main tenet of our mission, people helping people and improving the financial well-being of members?  

Credit unions are the only ones with such an altruistic “helping hand” mission and perspective in the auto-vertical. Dealers, banks, and internet marketers, with their digital strategies, are costing members thousands more on every vehicle purchase via vehicle pricing, protection products, and financing, simply because they are the first to offer their services to your members.  

What can a credit union do to increase auto loan volume and accomplish a key mission, while also saving members money AND generating more revenue and member engagement?

The answer is in developing OFFENSIVE STRATEGIES using technology, data, marketing, analytics and AI that attract members EARLY in the car buying process that get them into the credit union auto lending funnel.

These 3 easy steps will guarantee that your offense and defense deliver more auto loans:

First, credit unions must realize and accept the fact that vehicle buying, and therefore financing, starts online from a member’s phone, desktop, or tablet and can happen 24/7/365. Car buying is more digital than ever with members spending 12-14 hours online before buying a car. As soon as a member visits a dealership website or car research site, cookies are tracking their search and collecting data, which your competitors use to target them for a loan. Car research sites have an average of 20 cookies each, and it doesn’t take long for members to start seeing ads and “instant decision” auto financing offers from competitors.

The second step is understanding that technology now provides credit unions with digital solutions that provide all the vehicle research, buying and financing tools directly on their website, getting members into your auto lending funnel EARLY in the process. Here, members can spend that 12-14 hours, engaging with your loan officers, loan application, and protection product details, funneling members through your pipeline to loan closing.  

The third step is consulting with solution partners that specialize in the auto-vertical to gain an understanding of how technology has simplified a credit union’s Digital Car Buying Solution and how attracting members EARLY in the car buying process is key to success. You no longer need to provide tools for members simply by posting links to external sites on your website.  YOU CAN be that resource for members and attract their attention before they visit other sites. Your auto-vertical partner can bring your credit union the technology, marketing, data, analytics, and AI to compete and WIN against dealers, big banks, and internet marketers.

Submitted by: Chris J. Miller
Chief Operating Officer
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Direct line: (804) 361-4151

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