Report
366
Number
Aug 31 2015

A Wallet Allocation Rule Approach to Personal Loans

Despite credit unions having the highest customer satisfaction rating of all financial institutions, member satisfaction doesn’t always transfer into revenue growth. Credit unions can get a fair share of the loan and credit card revenue pie by understanding the other financial institutions their members are considering and the motivating drivers behind those choices.

Lerzan Aksoy
Lerzan Aksoy
Associate Professor of Marketing
Fordham University
Report Number 366

Executive Summary

Relationships are not enough. Credit unions have long relied on loyalty, good pricing, and goodwill to convince members to take out loans. And that often works, but not always, and not nearly often enough for the biggest real estate or auto loans. Yes, members like their credit unions, but they also display disloyal tendencies and shortcuts when choosing among loan providers.

Unlike fast food chains, hotels, or even deposits, loans typically reflect a winner-take-all equation: There are no financial rewards for credit unions when they do not rank first among competing alternatives. With high-value loans like mortgages, home equity lines of credit (HELOCs), and even auto loans, it will be years before members are back in the market. That makes it essential to understand why your members do choose your loans, and, more importantly, why they bypass you for competitors.