Alternatively: What’s keeping indirect members from fully committing to your credit union?

An indirect member is really only a member in name only. Forgoing the traditional route of opening a checking or savings account with the institution, they’ve applied for a loan through a third party such as a car dealership and now have an account with the credit union.

While technically a member of the credit union at this point, the relationship between the credit union and the new member is shallow, intended for one purpose, and comes with a termination date set in stone. In an ideal scenario, the credit union would cultivate the relationship with these indirect members, entice them with their great products and services, and convince them to move their checking and savings accounts over to the credit union and become full-fledged members.

However, achieving that ideal can be a bit of an uphill battle. Odds are, the indirect member already has a primary financial institution they’re comfortable with and may not be looking to make a change—at least, not without significant motivation to do so. Additionally, the indirect member’s interactions with the credit union tend to be incredibly limited and once the loan is repaid, they’re out the door. That’s why when it comes to indirect members, it’s critical to make every impression and interaction count. Don’t simply accept their lending business and call it a day, put in the work to assure them that your credit union is the best financial partner they could have.

The best part? You don’t even have to work to get them in the door—they’re already there, so show them what your credit union is capable of!

Blow them away with online banking

Your online banking experience can make or break your relationship with an indirect member. More than likely, it’s their first interaction with the credit union and their first impression of your credit union’s technological capabilities and overall member experience. It also might be the only place they directly connect with the credit union each month, when they sign on to pay their loan. Therefore, not only is the window of opportunity fairly limited (even more so if they set up auto-pay) but if they’re only going to interact with one service and conduct one transaction per month, that service and experience needs to look and feel great.

This is useful advice in general since, hey, your current direct members want the best experience possible as well!

How user-friendly is your online banking system? How modern is it? And no, I’m not asking if it has an AI chatbot, I’m asking if your online banking layout presents the information needed in a clear, clean, and easy-to-digest manner or if it looks like an imported Excel spreadsheet. Is paying the loan fast and simple? Or does it require twelve different clicks and three different tabs to complete? If your online banking appears and functions like it’s outdated (even if it’s not), it can give the impression the entire credit union is outdated or a digital laggard (even if it’s not). Very few things will turn a potential member or current member away faster, making your odds of getting indirect members to pack up their accounts and move to your credit union quite abysmal.

Remove your own roadblocks

If your online banking is successful in wooing an indirect member into considering full-fledged membership, don’t let self-imposed roadblocks hold your credit union back from meeting the member where they are. You might not even realize the roadblocks are in place, but they’re keeping indirect members from accessing your services in a way that meets their needs.

Consider an indirect member who is looking to become a full member and is actively in search of a new product. Looking to open a new account, they do some basic research into what they should look for in such an account and what the standard interest rates would be, etc., but at the end of the day, their first stop is to the credit union they already have a lending account with. The credit union has great offerings for this type of account with plenty of options, competitive interest rates, no fees, and more. The indirect member is sold and ready to jump into a stronger relationship with them. That is until it came time to sign on the dotted line. The credit union has no option to apply digitally but instead requires that members either email them with any questions or schedule an appointment to go into a branch and meet with an employee to get the ball rolling.

This is asking way too much of indirect members and is a perfect example of what your credit union should aim to avoid. It’s not even meeting them halfway, let alone meeting them where they are. Putting up roadblocks between your products and the member will only make it more difficult to ultimately transition that indirect member into a full one. If you want to bring indirect members into the fold, the process to do so and find any services they might need should be as swift and seamless as possible.

Digital applications and services are beyond the standard now, nearly five years post-pandemic. Requiring members to email you with questions or come into a branch only adds to the idea that your financial institution is behind the times. Furthermore, if the member is struggling to achieve the bare minimum—accessing your services—it signals that dealing with more complex issues (fraud, overdrawn accounts, etc.) might be even more burdensome and drawn out, which will ultimately turn them away.

If an indirect member is ready to come running into your credit union’s open arms, don’t put hurdles in their path to keep them from reaching you.

Communicate often and use personalized offers

Relationships are a two-way street. They require work from not just the member, but the credit union too. If the only way you communicate with your indirect members is through their monthly loan payments, late fees, or mass marketing emails, you’re not signaling to that member that you’re invested in building a stronger relationship with them. Nor are you conveying that you’re willing to put in the work to get it.

To quote marketing expert Bo McDonald, “’68% of consumers leave a business relationship because of a perceived attitude of indifference’…What I find is that the mindset of most credit union leaders is acquisition. Grow members. Get them in the door! When we say mission accomplished, we rinse, wash, repeat, and turn a blind eye to that new member and focus on the next new member.”

Credit unions struggling to convert indirect members into full members should reflect on what message, or lack thereof, they’re sending these potential members. Are they projecting an attitude of indifference towards the membership? If member acquisition is taking precedence over member retention (and yes, indirect member retention) or even if it’s merely perceived that way by your members, it is a sign that you are not investing enough into your member experience and services. Remember, this is the time to show the indirect member what your credit union is capable of and how it can offer the best services and products to fit their needs. How are you working to show the indirect member that you support their financial goals?

According to lending expert Ashley Melder, personalized offerings based on user data are far more appealing to indirect members than mass marketing emails. In her article on new-age lending, she asks, “What data do you already have access to on your core to know where they shop, where their monthly payments are going, or who else are they borrowing from? Use that information you have to help implement a strategy that could make them a full relationship member…be mindful of making your marketing and lending efforts less about filling their inbox and use what you already know about your members to make it personal for them.”

Don’t fall into a set-it-and-forget-it mindset with the indirect member’s loan. Use it as an opportunity to learn more about them, their needs, and their goals to offer products and services that can support those needs.

Don’t rest on your laurels

Credit unions are not for profit, they invest back into their communities, provide competitive rates and superior member service, and members own the institution and can participate in the democratic processes of the credit union. Speaking as someone who works in the credit union industry and knows all the good work that goes on in credit unions, it can be easy to think that’s enough to win people over. That indirect members will see all that good work and instantly feel compelled to bring all their business over to the credit union as a result.

After all, what’s not to love? Why wouldn’t such an institution be the automatic winner against the faceless, money-hungry banks—especially when every “How to Attract/Market to Younger Generations” article written by every Tom, Dick, and Harry (including me) out there boasts about how socially conscious Millennials and Gen Z are and how they will prioritize an institution’s community and societal impact when choosing who to do business with. As the industry of “people helping people” aren’t credit unions right on the mark?

While all of that is true—and I don’t intend for this to turn into yet another speech on how to appeal to younger audiences—all of that will mean very little if you cannot prove to indirect members that your credit union can provide the tangible products they need in a method that works for them. Communicate with the indirect member early and often, using personalized offerings to make them aware of how your credit union can help them further, and then make the process for accessing the product as easy as possible.

If the indirect member can only become a full member by scheduling an in-office appointment between 9-5 Monday through Friday and they work during that time, they will not only be turned off from the institution, but your credit union has, in fact, made them incapable of accessing your services. Your community donations will mean little to a working mom in search of an auto loan refinancing if she’s unaware of your products or she cannot apply for refinancing when and where she has the time. Switching from their primary financial institution to the credit union as a full member shouldn’t feel like a burden, it should be a relief.

The credit union mission is important, and the great work they do in their communities matters, but to the individual who has a need, the credit union’s ability to help them comes first and foremost. Don’t just assume because you were successful in getting an indirect member in the door with a loan that they’ll stay there, especially if you cannot meet their continued needs by the time the clock runs out.