In a presentation this month at the American Financial Services Association's Vehicle Finance Conference, Herman said lenders need to get to know their military customers and their special requirements, such as the need for service 24 hours a day, seven days a week.
Herman spoke after his presentation with Special Correspondent Jim Henry.
Do you work with dealers all over?
Our big markets include Texas, California and the Washington area. There's a high correlation between active-duty military and where veterans live.
Does your business area cover active-duty, veterans, or both?
It is both. One of the problems is that people tend to treat it like it's monolithic, but of course it's not. There are all kinds of ways you can cut it: officer or enlisted; branch of service; active duty or reserve; four-year veterans or 20-year veterans.
What's your overall message?
Like anything, the better you know your marketplace the more success you're going to have. It's no different from going into Brazil or someplace to do a merger and acquisition.
The CFPB seems to be zeroing in on this segment.
I can't speak for the CFPB, but I think I understand the CFPB pretty well. Since we're a bank, we deal with them all the time on the mortgage side. Like on the mortgage side, if you're focused on the customer, if you take the long view and do the right thing for the right reason, I don't think we have got anything to worry about.
I know that sounds like "do the right thing" and all that, but I also really feel like that's not enough if you're going to be sustainable. It has to be profitable; it has to be a good business, too.
It seems that many lenders are counting on financial-education programs as a way to demonstrate to the CFPB their goodwill toward this segment.
There's no doubt, sometimes you get somebody coming back from a deployment where they've had no opportunity to spend any money, and now they've got $25,000 in combat pay they've accumulated. You start to throw compound interest, etc., etc., at them, and of course they're not going to understand it all. Nobody that age would.
How do you do that training?
To be successful, you've got to leverage technology. This demographic values technology in how you deliver the product and services, and they will value how you leverage the technology to deliver financial education -- for instance, whether it's videos or something else. You can use the same technology for education that you use to deliver the services.