The Simplest Way To Convert Indirect Members Is Also The Most Overlooked

A goliath for indirect lending shares its strategy to build membership through its booming auto loan business.

Everything about Security Service Federal Credit Union ($6.8B, San Antonio, TX) is big. It’s headquartered in the biggest state, where it enjoys top-dog status as Texas’s biggest credit union, witha membership base of naval and military employees, served by additional branches in Utah and Colorado. It also boasts the biggest indirect lending program in the country, largelyfueled by auto loans.

SSFCU began making indirect auto loans in 1990, an unusual move for a credit union at the time. Since then, the indirect lending program has grown. The credit union works with 550 to600 auto dealers across all three states, adding about 6,000 new indirect members per month. In 2012, indirect lending accounted for about 51% of the credit union’s total $55.8 million income.

Like all successful businesses, SSFCU has grown by changing with the times and anticipating new trends. Since Callahan profiled the credit union in 2010, SSFCU has undergone some leadership changes. JimLaffoon, who joined SSFCU in 1989 and previously had served as COO, was promoted to president in December, replacing David Reynolds, who remains on as CEO. In Laffoon’s place, executive vice president of lending Mike Chapman now serves as COO.

Chapman has overseen lending at SSFCU for the past 12 years. He was joined by senior vice president John Worthington to discuss the credit union’s auto lending program, the challenges of converting indirect members, and the cooperative’s newrefocus.

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What is your philosophy for indirect lending?

John Worthington: The key is consistency. We establish relationships with the dealers and remain in contact with them. Our loan officers are working with those folks daily. They know who we are, and they know that when times are bad, we’re going to be there for them. When they discover you’re consistent and you do work with them, they will stick with you.

Mike Chapman: What we went through the last four or five years was unprecedented in terms of the economy. It’s been difficult. During those times, we made sure we were there for our members and our dealers. That was a big deal,because a lot of people bailed and stopped lending. We didn’t.


  • Security Service (SSFCU)
  • HQ: San Antonio, TX
  • Assets: $6.8B
  • Members: 922,881
  • Branches: 70
  • 12-Month Loan Growth: 10.08%
  • 12-Month Share Growth: 5.13%
  • ROA: 0.83%

Now that we have turned a little bit of a corner in the auto industry and they’re starting to sell more vehicles, we’ve positioned ourselves just like we’ve always had to provide service. We make sure that we’re prompt.We demand things from our dealers, that they do things a certain way, and they have the right to expect good service quick funding, quick answers.

We have a good solid program that we’ve vetted. We don’t have any plans to do things differently.

How do you convert indirect members into actual members?

MC: It’s the million-dollar question. I wish I could tell you that we have a plan, that we’re more successful than anybody else. Truthfully, it is the most difficult thing to do. The banks are going strong in the consumerlending area where traditionally, years ago, they didn’t. So you have a lot more competition.

We’ve studied and conducted surveys. If you were to ask members why don’t they do business with the credit union, one of the top reasons is they were never asked.

JW: Yeah. Why don’t you have a credit card with us? Nobody asked me.

MC: It’s so simple. You feel foolish. We’re not going to make that mistake anymore. Let’s make sure we ask. We are refocusing our energies to come up with the most effective way to market to them. It is a priority forthis year, for our vision. Everything is a process, and now we’re developing what we believe is the next generation program to reach these people.

Tell us about your outbound sales program. How does it work?

MC: Our outbound sales program focuses on calls. We don’t believe that you can convert indirect members just by sending them correspondence.

The key to our outbound sales program is that it’s regional. People at our service centers call every new indirect member. It’s even broken down, in some cases, by the service center nearest to them. We call them from a regional location,let them know we’re the nearest branch, and tell them about what we offer.

SSFCU is in three states. We have three different areas with call centers. We are looking to expand that if we need to. It’s more important for somebody to call from aservice center in the member’s area. We let them know we understand the demographics and the location. It’s more effective than to have a rep from Texas call somebody in Utah.

JW: A few months ago, we instituted a Spanish language capability. If you want to speak to someone in Spanish, we’ve got that capability not only from our main call center but also on our automated system. We also established asatellite call center in El Paso. About 85% to 95% of the people speak Spanish and would like to do business in Spanish. And that’s growing. We also have the capability in Colorado, where we have a backup center. Here in San Antonio, we havesome call center representatives, 15 of them now, who work from home.

MC: We have a commitment to our service areas. We have a commitment to Utah and Colorado just like we do to Texas, and that commitment is to serve these members to the best of our ability and to bring them the products and services theyneed. We want to make sure they know we care about their community and we care about them as members, so the local and regional presence is very important.

June 4, 2014

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