19 Best-Practice COVID-19 Initiatives for your CU Strategic Plan
The COVID-19 crisis has forced many credit unions to add new objectives to the top of their strategic plan. As a result, other objectives that were once deemed “crucial to success” have a lower priority and may not even get done. But it doesn’t have to be this way. This article takes the most common strategic plan objectives and preserves them by adding 19 best-practice COVID-19 initiatives (aka action items) that support them. In the end, the leadership team will implement the plan with excellence, instead of falling into the habit of just pushing due dates out.
Objective 1. Embrace your Culture and Deliver on your promise to improve the financial well-being of our members and community.
BACKGROUND If we go back to the great recession of 2009, banks nearly stopped lending while credit unions still worked hard to help members out. Today, credit unions once again stepped up by offering fee reversals, late payment forgiveness, skip-a-pays, forbearances, interest only payments, loan workouts, and more. In addition to this list, here are some more inventive initiatives credit unions are implementing to deliver on their service promise.
- Go back to Storybook lending. Listen to your members and provide help on a case by case basis. Note: This is not the age of FICO, it is the age of Cash Flow. Cash flow will show if we can get the members to where they need to be.
- Offer a Low Balance/Low Interest unsecured loan for furloughed or laid off employees.
- Create an offer to allow for the first two payments of any auto or consumer loan to be skipped.
- Create a Rework consumer loan product that allows seriously delinquent members a second chance by adding those late payments to the end of the loan.
- Create a Rework Mortgage loan that adds all late fees and missed payments to the principal, then modify the monthly payment accordingly.
- Conduct weekly staff video calls and be forthright about reduced hours, flexible schedules, and other things that are causing anxiety or can relieve anxiety.
- Develop a “We Care” program for Small Businesses. Show you care by reaching out to small businesses (members or not) and add them to your website to announce they are open for business. Also include verbiage on your webpage about how members can best support small businesses (positive reviews, buy gift cards, big tips, etc.)
- Support the community first responders by offering free lunches, hotel stays, and PPE.
Objective 2. Improve adoption of Digital Channels and Optimize the Member Experience
BACKGROUND Since this crisis began, 30 percent of consumers used a contactless payment method for the first time, while 70 percent of these same people planned to continue using it (RTi Research). Based on these numbers it’s obvious consumers want to be digitized, so let’s show them how we can help.
- Add an easy to use online appointment system that allows members to apply for loans, learn digital services, and get assistance with most anything they would normally visit the branch for.
- Create online demos as well as step by step illustrations for first time users of each feature of the mobile app, contactless payments, etc.
- Create a COVID-19 landing page to include all of these resources: online loan app, mobile app links, Q/A, demos, relief you’re offering, and financial counseling.
- Retrain the call center on how to train the members to use digital channels.
- Market Online Lending on the home page and freshen up the application tool.
Objective 3. Maintain an optimal balance of held loans and credit risk
BACKGROUND Let’s start with a few givens: Loan demand will fall, FICO will matter less, Defaults will grow, and putting a number on any of these variables is nearly impossible. But we have to try. The bank or credit union that manages these variables the best will end up on top.
- Stress loans for a mild-case and worst-case scenario. Note: Credit unions with strong capital will tend to budget losses for a mild-case to create a greater risk/reward scenario.
- If you don’t have the time, expertise, or tools for the above, reach out to a vendor. Note: We’ve seen one vendor that can use your call report and get you a COVID-19 Sensitivity Report for under $5K.
- Closely monitor government policy, pandemic duration, etc. and continuously adjust your credit risk model. Note: Forward-looking indicators can be ambiguous given these constantly changing variables.
- Determine the correct loan workout and forbearance plan (duration, who to proactively target, indicators staff should look for, etc.) Note: Forbearance isn’t for everyone and can send some further into debt. Ask questions and/or use custom fields in your credit modeling tools to flag those that we can/cannot help.
- Create a new pricing matrix based on a newly forecasted mix of loan types, duration, and credit risk. We typically write our worst loans prior to a recession. If we diligently forecast and budget we can avoid this misstep and underwrite loans that follow our 12-24 month plan.
- Create a Financial Relief form that captures member information related to their hardship. This extra step will help reduce the number of members accepting assistance that don’t actually need it. During these trying times, this sort of “hoarding” mentality is common.
All in all, the best way to support your members and staff is to continue to execute on the objectives you agreed are crucial to the growth and stability of your credit union. Help the team understand that each one of the initiatives above just goes to further support those key objectives already deemed crucial to this goal.