MEMBER BUSINESS LENDING "INSIGHTS"
What Gets Lost in MBL?
Does your credit union suffer from "the experience trap"?
Your credit union had long experience in consumer lending before you offered Member Business Lending. To launch MBL, you hired commercial loan officers, or a service organization, to bring their knowledge of the business credit world to your credit union.
But does your board of directors understand that world as well as it should? Do your support staff understand what is truly different about MBL? Do they assume that MBL is a straightforward extension of what the credit union has always done in the past?
I'm not talking about the mechanics of business lending – analysis, structure, and the like. I'm talking about basic keys to understanding MBL and the opportunities and risks it brings to your credit union.
I'm talking about a crucial conversation around goals, strategies, risks, and standards for MBL … a conversation that may never have even begun, lost in the effort to make MBL happen for your members.
The "Observations and Insights" articles below are conversation starters you can use to help board members and support staff become more aware of some unique issues that come with MBL, so they can make the right decisions and take the right actions to ensure that MBL is a benefit to the entire membership.
Available "Insights" Articles
Click on any of the titles below to download a two-page "Insight" on Member Business Lending:
- Who Sets Your Standards for Member Service? Do you take pride in your customer satisfaction ratings compared to banks? That's nice, but banks are not the real competition when it comes to delivering high quality service. Find out who really sets the standards you are trying to meet and exceed.
- Business Lending: The Secret Credit Union Advantage. Is the fact that many big banks have much more sophisticated small business lending systems that your credit union just a challenge, or is it an opportunity? What could credit unions do better to beat the big banks in the small business lending market?
- MBL: Are Your Sources of Repayment Riskier Than You Think? How do your loans get repaid? Your credit union could be caught in an "experience trap" from years of experience with consumer collateral and salary-based income. The cash-flow-based world of business loan repayment is very different. Rethink collateral and beef up your monitoring and detection systems.
- Service to Members vs. Service to a Member. Expanding your offerings to include MBL certainly serves your business-owning members. But does it serve all yourmembers? Can your keen focus on serving the individual member actually hurt your credit union? What's at stake with MBL as you balance serving your business owner with serving the interests of your entire membership?
- Your Business Lending Policy: Careful Plan or Accidental Outcome? Do you have a clear policy that outlines MBL strategies and standards? Or is your policy a collage of reactions to individual business loans, an "after-the-fact" description of what you've already done? The substantially higher, and different, risk associated with MBL demands a proactive approach.
- Determined to Master MBL the Hard Way? Banks have lots of experience, including making lots of mistakes, that CUs can learn from … if they don't fall for the belief that there's nothing to learn from the way banks do things!