Between stimulus payments, record-low mortgage rates, record-high unemployment rates, and a turbulent economy, it’s safe to say that the consumer loan market was significantly affected by the coronavirus pandemic. Furthermore, throughout COVID-19, consumers have been shifting more toward high-tech, low-touch online offerings. While we don’t know when the pandemic will end, one thing is certain: digitalization isn’t going anywhere. To attract and retain members, credit unions must offer technology for a faster, more user-friendly experience.
Making this expectation a reality is easier said than done, as a typical credit union’s consumer lending process can involve many different systems, people, and processes, but it’s not impossible. Many credit unions demonstrated their nimbleness on the commercial or member business lending side over the last year and a half with the Paycheck Protection Program (PPP). For credit unions to participate in PPP, they had to become more tech-savvy to navigate changing member needs and expectations throughout the waves of the pandemic. A similar transformation on the retail side will be necessary for success in consumer lending in today’s environment.
The consumer lending market is extremely competitive, especially with the influx of fintechs like LendingTree and Rocket Loans. Because of this, it’s critical that credit unions lean into digital adoption to satisfy changing member expectations. With so many competitors in the retail lending space, how can credit unions set themselves apart?
Despite the hardships the pandemic has caused, trust in lending partners is up year-over-year, according to the J.D. Power 2021 U.S. Consumer Lending Satisfaction Survey. Based on the survey results, traditional lenders outperformed fintechs in several key categories:
Putting the borrower first
Providing honest communication
Providing more reliable technology
Credit unions should tap into the ways that digitalization can continue to enhance these advantages.
Putting The Member First: Increasing Transparency And User-Friendliness
Many credit unions were able to gain new members through their swift response to the Paycheck Protection Program (PPP). These institutions were the heroes of PPP, reacting quickly to the program and implementing technology to scale their processes to meet the high volume of applications. Being able to help these member businesses during a difficult time garnered a lot of goodwill and member loyalty – but can credit unions keep it? Can credit unions use the same approach they used to transform the PPP process for other areas of lending to foster deeper member relationships?
A key part of this initiative will be moving away from siloed, disparate systems and investing in technology that enables a single point of data entry to help break down data barriers. Fully centralized and integrated data gives credit unions better insights – from areas of risk to growth opportunities – to drive faster, smarter decisioning.
Centralization, automation, and efficiency gains are also important for better member service. Consumers have adapted quickly to their newfound remote lifestyles, heightening the importance of efficient, effective digital offerings. Going forward, credit unions will have to make a conscious effort to deliver high-level service with remote delivery. Enhancing the member experience means delivering on expectations with digital offerings.
Using Technology To Create A Seamless Experience For Lenders And Members
To become more competitive, faster, and more profitable in the retail lending space, credit unions will have to increase their scalability. Manual, repetitive data entry, physical applications and signatures, and having to chase members down for additional documents waste valuable time for the lender and frustrates the member. With the right technology, like a loan origination system (LOS), credit unions can transform inefficient processes for a frictionless lending experience.
An LOS enables credit unions to offer a fully digital retail lending experience to their members, where they can quickly apply for loans, securely upload documents, and electronically sign for a loan online anytime, anywhere. Mobile-friendly, member-centric platforms put the consumer in the driver’s seat, allowing them to apply for their loan quickly and easily.
Meanwhile, the credit union can perform quick analysis and automate the decisioning process with an end-to-end digital LOS, helping to ensure efficiency, consistency, and scalability. With an integrated relationship manager to track the credit union's member pipeline and notify lenders of upcoming tasks and automated workflow templates, an LOS optimizes many areas of consumer lending. Credit unions that can make fast decisions on creditworthiness give themselves a much-needed advantage in a competitive consumer lending environment. Lenders can focus on high-value tasks, like fostering member relationships, rather than chasing down documents and manual data entry.
An automated, seamless system will also significantly help buy-in and usage among users at the credit union. To further promote strong adoption of an LOS, users should receive adequate training and support from the technology provider. Managing “the people side of change” can help institutions maximize their LOS’s potential.
The pandemic will have lasting effects on consumer behavior. To thrive in the retail lending space, it’s important that credit unions deliver an easy-to-use technology for their members and lenders.
Would you like to learn more about how your credit union can streamline its consumer lending process?
Check out Abrigo Consumer Lending Software, which provides an automated workflow that can integrate with your core to replace manual processes and improve efficiency and revenue.
Abrigo enables U.S. financial institutions to support their communities through technology that fights financial crime, grows loans and deposits, and optimizes risk. Abrigo’s platform centralizes the institution’s data, creates a digital user experience, ensures compliance, and delivers efficiency for scale and profitable growth. Visit www.abrigo.com to learn more. Follow Abrigo on social media using @WeAreAbrigo.
Kylee Wooten is senior content and media relations manager for Abrigo.