Low consumer confidence a top concern for credit unions | Auto Finance News | Auto Finance News

Low consumer confidence a top concern for credit unions

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The Consumer Confidence Index fell to 121.5 in June — the lowest level since September 2017 — and lenders are bracing for impact.

In a June 25 LinkedIn post, credit union executives took to social media to share concerns for the impact declining consumer confidence will have on growing, or sustaining, loan portfolios.

Adam Ennett, chief lending officer at USC Credit Union, said the biggest hindrance to growing loans this year is “the wavering economic indicators toward a future recession…which is a direct feed into consumer confidence.”

Rami Borsheh, director of consumer lending at First Entertainment Credit Union, agreed that consumer confidence is “a major factor,” noting that “the fear is definitely out there, and it continues to linger for lots of folks.”

Jonathan Patrick, former senior vice president and chief lending officer at UT Federal Credit Union, noted that he suspects consumer confidence and uncertainty in economic conditions will stymie loan portfolio growth.

Consumer confidence wasn’t the only hurdle for lenders, however. The “Amazon Effect” — catering to the “want it all, want it now” demographic — has credit unions concerned. Washington State Employees Credit Union’s director of digital lending, Ryan Brooks, said “[fluid] expectations from members having experiences from multiple other sources and expecting a similar experience with traditional FIs” will be another top concern.

“Uber doesn’t ask you if you want the status of the ride, they provide it embedded in the experience,” Brooks said. “Amazon doesn’t ask you what you want, they embed it in the experience. Consumers expect this, and until FIs start delivering, they will continue to look at nontraditional lending options,” he added.

CU Direct VP of Innovation Brian Hamilton also listed the Amazon Effect as a top challenge. “The ‘Amazon Effect’ has created a new paradigm by which those that deliver a more intuitive, personally curated and effortless experience will win,” he said.

Produced by the Conference Board, the Consumer Confidence Index measures consumer attitudes and buying intentions based on business conditions and likely developments. In May, the Consumer Confidence Index stood at 131.5. Escalation in trade and tariff tensions is a contributing factor to the decline, according to Lynn Franco, senior director of economic indicators. “Although the index remains at a high level, continued uncertainty could result in further volatility,” she said in the report.

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