6 Ways To Say Yes To The Request

In an increasingly competitive lending environment, these six practices are helping credit unions serve members better and make decisions quickly.

In an increasingly competitive lending environment, where quick decisions and outstanding service are critical to getting the loan, some credit unions are taking new and innovative approaches.

Here are six best practices to serve credit union members better, get to decisions more quickly, and when possible, say yes to the request.

1. Leverage Branch Talent


first heritage FCU
DATA AS OF 09.30.16

  • HQ: Painted Post, NY
  • ASSETS: $433.3M
  • MEMBERS: 34,095
  • 12-MO SHARE GROWTH: 5.2%
  • 12-MO LOAN GROWTH: 11.5%
  • ROA: 0.62%

Despite the recent rise of online applications, many loan requests are still generated within the branch network. At First Heritage Federal Credit Union ($433.3M, Painted Post, NY), financial services representatives (FSRs) consult directly with members and analyze all of their financial needs.

The FSR is typically someone we’ve identified to take more of a holistic approach to serving the member, says Dave Walker, senior vice president of lending at First Heritage. We take someone who has been trained as a loan officer, and we train them to open accounts. The FSR must be able to identify opportunities and uncover leads from a credit bureau. It’s much more of a sales role than the typical loan officer who more or less takes an application and processes it.

The ownership is on our front-line staff to be the voice of the member.

Similarly, Heritage Federal Credit Union ($523.1M, Newburgh, IN) is developing an in-house Member Advocacy Program to help capture more information from the member in the initial interview and increase loan approvals.

The ownership is on our front-line staff to be the voice of the member, says John Phipps, chief lending officer at Heritage. We have a centralized underwriting group, so when we underwrite loans, we have to work with the information we are given. If we don’t know the whole story, the decisions are made solely on the numbers.

2. Train To Breed Confidence


heritage FCU
DATA AS OF 09.30.16

  • HQ: Newburgh, IN
  • ASSETS: $523.1M
  • MEMBERS: 52,271
  • 12-MO SHARE GROWTH: 7.5%
  • 12-MO LOAN GROWTH: 3.2%
  • ROA: 0.41%

To help branch staff develop the skills necessary to unearth sales opportunities, training is critical. Credit unions use both internal and external training programs to help branch teams gain comfort with the initial member interaction.

Heritage puts its financial services consultants (FSCs) through CUNA’s Financial Counseling Certification Program, a recognized industry certification. The exam consists of eight modules, and participants must be re-certified every three years.

Being the member’s advocate doesn’t always mean saying yes, Phipps says. We’ve incorporated ongoing training into our program to help staff understand the whys behind our decisions so they can be better advocates for our members.

We’ve incorporated ongoing training into our program to help staff understand the whys behind our decisions.

Redwood Credit Union ($3.1B, Santa Rosa, CA) developed an in-house certification program tailored to branch staff. The program teaches member service representatives (MSRs) how to identify opportunities and make referrals. More than 60 representatives have earned a certification to date.

We rolled out the certification program a couple of years ago, says Ron Felder, chief lending officer at Redwood. We put small groups of MSRs through the training each quarter. It’s about teaching them what to look for, what questions to ask, how to identify opportunities, and dig a little deeper to help the member.

3. Educate The Member For Future Success

Members experiencing financial difficulty often look to their credit union for help. Sometimes this means the member might not get the loan they want today, but with some coaching and guidance, they might be in a better position down the road.

We are working to go beyond being a trusted advisor to taking more initiative to find solutions, says Ruth Jenkins, CEO of Heritage. Even if we can’t get to a yes’, we don’t want to turn the member away. If they want to buy their first home, but they’re not ready, what do they do? If their FICO score is low, and they don’t want to pay a double-digit interest rate on their loan, what do they have to do to improve their score?

Even if we can’t get to a yes’, we don’t want to turn the member away.

Redwood offers members with less-than-stellar credit or who are experiencing some financial hardship a range of specialized options.


redwood credit union
DATA AS OF 09.30.16

  • HQ: Santa Rosa, CA
  • ASSETS: $3.1B
  • MEMBERS: 221,634
  • BRANCHES: 16
  • 12-MO SHARE GROWTH: 16.4%
  • 12-MO LOAN GROWTH: 18.4%
  • ROA: 1.84%

We have some products, like our Credit Builder secured credit card and New Start auto loan, that are designed specifically for folks who are new to or rebuilding credit, CLO Felder says. We also offer free credit counseling through an outside firm, and we have started providing all of our members with access to a free credit score if they have a loan with us. These are some ways we can improve the financial wellness of our membership.

4. Employ Checks And Balances

It is becoming common for credit unions to employ central underwriting, a practice that helps minimize conflicts of interest and ensures consistency in loan decisions.

We’ve stayed away from giving authority to the front-line group because they have lending goals and we don’t want any kind of conflict of interest, says Phipps, the CLO at Heritage. We don’t want to put anybody in a position where a decision could be compromised.

If our member service representatives and management team think we’ve made a bad decision, they can send the loan application to the credit manager for a second review.

At Desert Schools Federal Credit Union ($4.0B, Phoenix, AZ), everything is centralized.


desert schools FCU
DATA AS OF 09.30.16

  • HQ: Phoenix, AZ
  • ASSETS: $4.0B
  • MEMBERS: 317,683
  • BRANCHES: 48
  • 12-MO SHARE GROWTH: 12.2%
  • 12-MO LOAN GROWTH: 12.7%
  • ROA: 1.56%

The branches have no lending authority, although we do have a second review process, says Gary Sneed, chief lending officer. Our member service representatives and management team go through high-level credit training to understand our credit process and risk tolerances. If they think we’ve made a bad decision, they can send the loan application to the credit manager for a second review.

5. Use Technology To Stay Competitive

Many credit unions today use automated decision technology to provide qualified members with instant approval of their loan requests. Key criteria such as credit score, loan-to-value, and debt-to-income ratios are built into the decision engine, freeing up underwriting staff to focus their efforts on more challenging credit decisions.

Desert Schools FCU decisions nearly 85% of loan requests within 30 minutes.

At Desert Schools, a combination of auto decisioning on 20 to 30% of loan requests and rapid response from its central underwriting team of eight employees has made a tangible impact. Today, the credit union decisions nearly 85% of loan requests within 30 minutes.

Callahan & Associates surveyed 333 credit unions to learn about automated decisioning practices in the consumer lending portfolio. See the results in, A Brief Look At Trends In Automated Decisioning.

Desert Schools also uses new technology in the back-end of the loan process. The credit union’s loan origination platform includes multiple dashboard views of the loan pipeline, allowing supervisors to view approval and denial trends down to specific criteria such as FICO score and loan to value ratios. The management team can adjust the criteria on the fly and use the data to educate the team.

If we see some high FICO, low loan-to-value loans being declined or low FICO, high loan-to-value loans it’s a training process that helps keep the lending team on the same page.

6. Balance Growth And Risk

At the end of the day, managing a successful loan portfolio comes down to effectively balancing growth with risk. Heritage starts with a holistic, enterprise risk management approach.

We have worked with our lending and collections area to evaluate the inherent risks in our program, the controls in place, and the areas we need to include in our audit plan, CEO Jenkins says. Without taking the enterprise risk management approach, you don’t see the accumulation of all risks throughout the organization and what that presents to your capital.

It’s important to look beyond the credit score.

At First Heritage, managing risk comes down to actively monitoring the underwriting queue to ensure the credit union is making good decisions.

We look to see if there is any collateral we could have taken, can we offer to do the loan with a co-signer, and did we structure the term properly, says lending SVP Walker. The other factor is making sure we’ve collected all the information necessary to make the loan approval. Did we request income verification, and did we consider the member’s assets? It’s important to look beyond the credit score.

Looking beyond the credit score is a common theme among credit unions adept at getting to yes. At Heritage, a member with strong credit but high debt ratios recently applied for a loan to pay off medical expenses. Heritage did not approve the loan as requested, but the credit union’s staff saw an opportunity to consolidate all the member’s debt into a 10-year first mortgage to meet the member’s specific need while saving him $600 a month in debt payments.

It was a good solution, CLO Phipps says. It wasn’t the request the member had asked for, but it allowed us to structure the loan to free up his cash flow and get to yes’ in a different way.

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