How credit unions can tap into the fast-growing EV market
Credit unions have historically been recognized
as leaders in automotive lending. However, traditional financing approaches
continue to change and significantly impact the auto market. Some consumers are
starting applications or completing their purchase online. More consumers have
become comfortable purchasing online, and its predicted that one
in three buyers will research and buy their next vehicle this way. A J.D.
Power report states that 25-30% of buyers would like to purchase all or
partially online, which jumps to 40% for EV buyers.
Credit unions must be ready to adapt to new car-buying models and address consumer demands EV vehicles. The EV market continues to increase year-over-year as 1.2 million vehicle buyers choose electric in 2023. This, combined with the rise in direct-to-consumer models led by EV retailers like Tesla, has set expectations for a modern and seamless car-buying experience at the point of sale. Credit unions must explore top-of-funnel lending strategies to meet these expectations and stay relevant in the marketplace.
Helping credit unions connect to new lending channels
Origence launched FI Connect to provide top-of-funnel opportunities to credit unions, allowing them to compete where purchases are made, and financing is decided. The company originates the loan, purchases and places the loan with an eligible credit union partner in near real-time.
Last September, Origence announced its partnership with Tesla, the largest EV manufacturer in the world, to provide top-of-funnel opportunities to credit unions. Tesla offers point-of-sale financing; however, this is the first time credit unions will be an option through FI Connect. With 24/7 operations, FI Connect allows credit unions to compete where purchases are made, and financing is decided. Now, credit unions can compete with embedded financing and direct-to-consumer models like Tesla. They gain access to new lending channels while competing with the major banks and finance companies.
With FI Connect, credit unions can capture the EV market, which helps to diversify their loans and increase volume. Embedding their offerings into this channel can also attract new high-quality members.
Using new lending channels to your benefit
Silver State Schools Credit Union (SSSCU) is an early adopter of FI Connect. The $1.1 billion-asset credit union is a significant player in the indirect auto market and wanted to expand its market share by offering EV lending options. SSSCU already used Origence’s indirect platform, so the implementation process was quick. The credit union started conversations in the summer of 2023 and went live in November 2023.
Since implementation, the credit union has funded $17 million in loans and onboarded more than 400 new members. SSSCU can participate in point-of-sale lending opportunities. Through FI Connect, the credit union has access to a new lending channel without requiring an extensive infrastructure or compromising quality. They will remain competitive in an evolving marketplace and gain market share over banks and captives.
Credit unions are positioned for the future of lending
While the initial focus of FI Connect has been on Tesla loans, the lender will accommodate other loan types. Credit unions can work with FI Connect to build a larger top-of-funnel for lending as consumers increasingly seek affordable options to fund their needs. As lending continues to evolve, credit unions must provide lending options through embedded financing channels to stay competitive. Their relationships with dealerships will remain meaningful, but it’s time to expand into direct-to-consumer models. Credit unions like SSSCU have already seen early benefits to this approach, and it’s only a matter of time before more follow suit.
About Author:
Brian Hamilton is the
division president of Origence Lending Services, which provides credit unions
with scalable outsourced solutions to streamline their lending operations.