Knowing Where to Look for Big Opps

There are two generally accepted ways in which to grow your bottom line — either increase the number of clients you serve or increase the range of products your existing clients use. The challenge in both cases is learning how to read the landscape to identify where the next big opportunity lies. That job has become a lot easier as of late..if you know where to look.

 
 

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There are two generally accepted ways in which to grow your bottom line — either increase the number of clients you serve or increase the range of products your existing clients use. The challenge in both cases is learning how to read the landscape to identify where the next big opportunity lies. That job has become a lot easier as of late..if you know where to look.

The regulatory call report that credit unions file each quarter with NCUA traditionally includes accounting data and statistical information on existing products and services. More recently, the call report has required increasing amounts of data on new programs and services that credit unions plan to introduce within the next six months. This data can be the divining rod pointing you to a new base of customers.

Tucked under ''Miscellaneous Information,'' the revised call report asks about several specific areas of new business:

New Program or Service Offering

A. None F. Real Estate Loans K. New CUSO
B. Indirect Lending G. Risk Based Loans L. Data Processing Conversion
C. Commercial Lending H. Direct Financing Leases M. Insurance / Investment Sales
D. Member Business Loans I. ATM / Debit Card Program N. Other
E. Participation Loans J. Mortgage Processing  

A quick check at some of these categories shows that at year-end 2002, 131 credit unions planned to roll out with a new indirect lending program by June 2003. Another 95 credit unions were planning to start up a member business lending program. Eighty-nine credit unions were upgrading their insurance or investment programs.

These numbers only tell half the story, however. To make these numbers truly useful, one needs to understand where the activity is occurring, that is, within which peer group, and which service categories are seeing the greatest growth. That's where a little skill at manipulating the numbers comes in handy.

In addition to counting the number of credit unions adding new services, consider also the asset sizes of the credit unions that responded positively. Knowing which peer group will be the most active in a new program or service category will give you an idea where to concentrate your resources. For example, 33 credit unions plan to add commercial lending to their portfolios. Thirty-three credit unions out of 9,894 is not a huge number to get excited over until you realize 20 of the 33 are credit unions above $100 million in assets, which presents a much narrower market. You can now channel your resources into a smaller group of prospects with a greater likelihood to provide a return on your marketing investment.

The chart below is a sampling of new activity across the peer groups:

New Service Activity within Peer Groups

 
Peer 4
Peer 5
Peer 6
Peer 7
Peer 8
Peer 9
Totals
Asset Size
$5 - 10 M
$10 - 20 M
$20 - 50 M
$50 -
100 M
$100 -
250 M

Over
$250 M

 
Indirect Lending
4
13
43
17
31
15
131
Commercial Lending
1
4
5
3
10
10
33
Participation Loans
11
19
20
13
11
14
109
Real Estate Loans
72
67
55
16
13
8
266
Insurance / Investment
13
11
16
10
17
14
89

Data as of December 31, 2002. Source: Callahan & Associates, Inc. Peer-to-Peer.

A second advantage to looking at new services is market research. Examining which areas of activity are experiencing the greatest growth gives you a heads-up on where the trends are going. Understanding which service areas are growing the fastest helps you identify in which program or service category lies your best opportunity to increase your business. For example, lending is a credit union's bread and butter, but knowing that 109 credit unions plan to add participation loans to their portfolio while 341 plan to add risk-based lending helps you better organize, prioritize and present your services to the credit union market.

This data may be most helpful to suppliers who offer a range of services to credit unions, but even single-product suppliers should find it helpful to determine levels of interest in their product offering.

 

 

 

May 19, 2003


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