Doing Well by Doing Good Grow Your Credit Union By Serving Expanded Markets Lois Kitsch lkitsch@ncuf.coop
Today’s Conversation Doing Good is Good Business Credit Union Growth Examples of what credit unions are doing to grow by offering services to new market niches including young people, Immigrants and low-wage working families. Sustainable Business Models Talking through sustainable business models for non-traditional credit union products such as payday loans, non-prime car loans and innovative savings accounts. Where to Go – Find the open source tools to help your credit union develop Products and services to serve low-wealth households
Doing Well by Doing Good – The Spectrum Credit Union Story
What does a poor or mediocre score cost?
Emily
Karen
750
650
Credit Card Rate – 9.9% Auto Loans – 5% Mortgage one – 5.5% Mortgage two – 5.5%
Credit Card – 19.9% Auto Loan – 8% Mortgage one – 7.375% Mortgage two – 7.375%
What does a poor or mediocre score cost?
Emily
Karen
Cost of Poor Credit
Emily 70
$39,600 $21,166 $174,760 $417,616
Karen 70
Credit Card Interest Auto Loans Mortgage One Mortgage Two
$79,600 $34,653 $243,020 $594,572
100 Points Cost Karen $ 298,704
Think of the impact of Dorothy’s credit score on her access to financial services
Continuous set of services to allow members to move from step to step, no matter where they start
Alternatives FCU Ithaca, New York
Product Innovations •Provide Right Time Financial Education •Transaction Services •Out of the box Savings •Access to affordable loans – i.e. payday loans alternatives, non-prime auto loans … •Wealth Building Products such as student loans and mortgages •For people who most Need access to affordable financial services
U.S. Adult Population by Banked Status
Note: Unbanked consumers are those with no checking or savings account. Underbanked consumers are those with a checking or savings account who have made one or more nonbank financial transactions in the past 30 days. Source: CFSI Underbanked Consumer Study, 2008
Underbanked Market Size The total underbanked population consists of 106 million adults or 49% of the population ages18 & older Florida’s unbanked population is 5 million people or 27% and the underbanked population is closer to 9 million people Source: 2008 CFSI Underbanked Consumer Study
Florida Today
Employment and Benefits 6.2% unemployment 25% working in low wage jobs 36.4% participate in retirement programs 51.4% employers offer health insurance (24.2% pay for their own insurance and 24.4% uninsured)
Home Ownership 65% Home ownership 7.3% foreclosure average (compared to nation wide average of 3%)
22% High cost mortgages http://scorecard.cfed.org/state_data/florida.php Visit - www.realsolutions.coop
% of Asset Poor Households in Florida
Low Wealth does not always equate to low income.
11%
3%
46%
$24,800 to $44,800 $44,801 to $68,800 $68,801 to $103,000 >$103,000
22% In Florida, 22% of households earning more than $44,000 and 3% earn more than $100,000 are asset poor.
<$24,800
36%
REAL People
At the right price and terms! Appropriate Products and Services
Membership growth
Customer first? Then a member?
Check Cashing Customers Grow into membership Prepaid Cards
VITA All Cash Global
To learn more…
Second Chance Checking A REAL Solutions® Implementation Guide
Visit the RS Impact Center www.realsolutions.coop
Want to know more?
Three Free Webinars - Provide Tax Preparation Assistance through Voluntary Income Tax Assistance Programs This series is exclusively for participating REAL Solutions® credit unions and leagues. Tax Preparation the Credit Union Way Nancy Pierce Field Coach – REAL Solutions
Visit www.realsolutions.coop
Right Time Education – It Matters
FICEP Step WAY out side the box education.
To learn more…
Filene Research Institute www.filene.org
www.realsolutions.coop League Highlights
Let’s Talk Saving Programs Savings Matter
Coming Soon
Savings Toolkit – and Webinar Series Visit www.realsolutions.coop
Let’s Talk Loan Products
Non-Traditional Loan Products
Payday Loans – Small short term loans with high cost and balloon payments often causing a cycle of debt. Users: Are banked – 100% have a bank account May be homeowners (42%) Are often under the age of 45 (median age is 32) Are women with children at home (62%) Are of low to moderate income – 50% have incomes from $25,000 to $50,000 Credit Unions are moving members to alternative short term loan products - saving their members big money while at the same time pushing revenues to their bottom line.
Want More info?
Visit www.realsolutions.coop for a comprehensive Toolkit on how REAL Solutions Credit Unions Provide short term loan products to their members.
Contact League Liaison Natasha Melugin
Non-Prime Auto Loans Who Needs them? •88% of Americans drive to work •Reliable transportation provides job, education and family opportunities •Non-prime borrowers traditionally not served by credit unions Credit unions are missing a huge business opportunity -
Visit the Impact Center to review the 7 lessons learned!!
Want to know more?
Four Free Webinars - Provide Affordable Auto Loans To Non-prime Borrowers and Make Money for you CU This series is exclusively for participating REAL Solutions® credit unions and leagues. Steer Clear of Predatory Car Loans With Bill Myers Field Coach – REAL Solutions® Senior Fellow, Aspen Institute
Visit www.realsolutions.coop
Join us at REAL Solutions
To Learn more contact Laura Vann or Adena Whitman LSECU Visit http://realsolutions.coop
Lois Kitsch REAL Solutions 407 616 2409 lkitsch@ncuf.coop