Q&A with Point Predictive Advisory Board Member Barry Kirby

Q&A with Barry Kirby

Since joining the Advisory Board this summer, Barry Kirby, the subject matter expert on credit unions has been weighing in on how credit unions can benefit from Point Predictive technology. We sat down with him to discuss the state of the industry and where credit unions have an advantage in consumer lending.

Point Predictive (PP): As Point Predictive has reported, credit unions are in a growth phase. What are some of the unique challenges they will have to overcome as they continue to expand?

Barry Kirby: One of the strongest headwinds specific to credit unions right now is an aging membership. Nationally, the average credit union member is 54 years of age; the average US consumer overall is 37. In a few short years, those members will be at the point where they’re getting ready to retire, not taking on more loans. The challenge is attracting those 30- and 40-year-old consumers who are in their prime earning years and, by extension, in their prime borrowing and spending years. Everyone in the credit union world is thinking about how to bridge that gap.

PP: How does credit unions’ increasing indirect auto lending, play into that?

Barry: Credit unions’ move into indirect lending has provided an enormous opportunity to reach more borrowers and expand their membership base, but there are more risks when compared to the direct auto loan products that credit unions have traditionally offered.

As these institutions continue to grow in terms of the volume of loans they service and assets under management, they are starting to face the challenges that larger institutions have been experiencing for some time. A prospective indirect borrower simply has more of an opportunity to inflate their income than an established customer does. And, going back to the demographic issue, if a credit union has been serving the same 54-year-old member for 30 years, some types of fraud perpetrated today didn’t even exist back when the relationship began. Reaching out to new, younger members means being vigilant toward new risks and open to new ways of thinking. It’s critical to have the right technology in place to do that.

PP: How should credit unions approach that outreach? What is the strategy?

Barry: The challenge is ensuring that a new borrower or new member is who they say they are without being onerous, which is where the type of technology that Point Predictive offers comes into play. The vast majority of consumers represent themselves honestly. For them, it needs to be a no-touch experience. They should be able to go through the vetting process without any burdensome requests. 

From a resources perspective, another factor that leadership is weighing is how prominent of an issue fraud prevention is right now. The C-suite can’t afford not to invest in technology that helps protect their membership and streamlines the lending process for new borrowers.

PP: How can credit unions distinguish themselves from commercial banks on that front? What advantages do they have?

Barry: In terms of risk, I think credit unions tend to be a little more tolerant than traditional banks, in that they’re willing to look at someone’s financial situation more holistically. They like to look beyond black-and-white credit scores and consider the bigger picture, which is what they were chartered to do. Another part of it is just business necessity. Because credit unions tend to engage in little, if any, commercial lending, they have to capitalize on the opportunities that exist in the consumer market and serve their local communities.

In any case, the same technology used to detect fraud reveals certain trends that credit unions look for in evaluating a loan application, such as income, employment, and residence histories.

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