WILMINGTON, N.C.-The trend toward consumers leaving big banks and taking their checking accounts with them will continue in 2013. But that's not where the best opportunity lies to add new checking accounts, reminded one expert.
"Clearly we will continue to see the trend of consumers shying away from big banks this year and credit unions need to continue to capitalize on that," said Velocity Solutions President Christopher Leonard. "However, a typical credit union only has about half of their members' checking business."
Leonard recommended cross selling checking through incentives to switch, and by targeting specific segments of current members with campaigns that match their banking habits, such as members who just send in the car payment every month.
"Referral programs work, as well," noted Leonard. "Credit union members tend to be pretty excited about the CU and are excellent referral sources. Give them an incentive to bring in a new member with a checking account."
Leonard said he often sees checking opportunities lost as the result of lending practices, when the CU won't accept a new member simply because of a low credit score.
"They reject the person because they know they can't make a loan. That is a mistake because a lot of people are good members in terms of a deposit relationship. They may overdraw their account and generate overdraft income or incur other fees. Plus, in this economy, they may have had one rough year from a credit report standpoint and may still be a good lending risk. Don't base your decision on taking in a new member based on a credit score."
Leonard advised that credit unions always run a report at sign-up, such as those available through ChexSystems, to make sure a new member has not defrauded anyone or has a lot of charge-offs.
For info: VelocitySolutions: www.myvelocity.com.
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