New technologies are rapidly reshaping the way credit unions do business. Digital services are replacing traditional brick-and-mortar services, and it’s likely that this trend is here to stay. For credit unions to keep up with the times and remain competitive in this digital age, they must continue to upgrade their technologies to enhance their digital banking services.
One of the most important aspects of digital banking is digital lending. Credit union members now want fast and easy access to digital lending services. This means CUs must reevaluate their digital lending services and update technologies to provide a seamless, user-friendly experience for members. One of the first steps for CUs is to understand how new technologies are changing the market, as well as some of the benefits of enhancing your CU’s digital lending services.
Digital lending: changes in the marketplace
A variety of factors are contributing to the changes taking place in the banking world. From the increased use of mobile phones to the rise of fintech companies, technology is evolving quickly and consumer behaviors are changing with it. Understanding how and why these changes are occurring can help your CU stay competitive in the new market.
Let’s look at some of the reasons digital lending and other digital banking services have recently become so popular:
Consumer behavior. The rise of e-commerce, mobile banking, digital wallets and digital lending in 2020 all point towards a drastic shift in consumer behaviors in banking. While some more traditional customers may choose to continue visiting the branch, it’s likely that the e-commerce trend will continue to evolve as consumer behavior changes.
Technology. These days, it’s difficult to find a person who doesn’t have a smartphone in their pocket. As technology plays an increasingly bigger role in our lives, it's affecting not only how we communicate with each other, but also how we shop, bank and apply for loans. People are simply becoming more and more comfortable conducting business online or from their mobile phone. From shopping online to quickly applying for a loan, technology is reshaping what consumers want and expect.
Fintech. Perhaps no other factor is as important for credit unions as the rise of fintech companies like PayPal, Venmo and Robinhood into the banking space. Fintech apps allow users to shop online, send money to friends and family, invest, and perform other banking transactions rapidly and efficiently. Some fintech apps even offer digital loans that can be approved or denied immediately, setting a new bar for digital lending services. It’s vital that credit unions pay attention to new trends and understand how fintech companies are reshaping digital banking so that they can meet their member’s expectations in the future.
- The younger generation. Generation Z and millennials are accustomed to doing things online and receiving immediate results. That means they’re unlikely to put up with lengthy loan applications, especially if they must go into a branch to sign documents or conduct any in-person business. For credit unions to continue to appeal to the younger generation, they must make sure their digital banking services are as fast and efficient as the competition.
In 2021, the question is no longer about whether digital banking services and digital lending will be important for the future of credit unions. That question has been answered, and the answer is yes. Now is the time for CUs to understand the benefits of digital lending services and to begin taking the steps to implement the necessary changes.
The benefits of improving your CU’s digital lending services
The good news for credit unions is that not all change is bad. By improving your CU’s digital services, your CU can become more efficient and create a better user experience for your members. By enhancing your entire digital banking ecosystem, you can save your CU time and money, while also keeping members satisfied.
Listed below are a few of the benefits of digital lending:
- Growth. Lending has always been one of the keystones to a healthy, sustainable credit union. By offering members more efficient digital lending services, borrower satisfaction and the likelihood of attracting new members is increased. Enhanced digital technologies can also help your CU onboard new members.
- Efficiency. While in-person legacy lending systems served their purpose, they were also complicated and time-consuming, and as a result, they had low retention rates. Digital lending allows 24/7 access from any device for both borrowers and lenders, eSignature document signing and near-instant loan approval. It also frees up time for employees and gives them sophisticated tools that can be used to improve member services and make the CU more efficient.
- Better decisions. By leveraging big data from digital lending services, your CU can analyze trends and patterns among borrowers. CUs can use data from digital lending to engage the right members and appeal to potential borrowers, ultimately making their lending strategies more personalized and effective.
- Staying competitive. As the marketplace changes and disruptive technologies continue to make inroads into the digital lending space, credit unions must do what they can to attract new members, especially from younger generations. By providing fast and easy digital lending services, you can attract tech-savvy borrowers and expand your marketplace potential.
As credit unions enhance their digital banking ecosystems, it’s important that they stay true to their core values and continue to provide personal attention to individual members. Fortunately, moving towards digital banking does not mean moving away from personalized experience and support.
The right credit union core software can help your CU modernize your digital lending services and create a seamless digital lending experience for your members. The FLEX core processing system has been chosen by credit unions of all sizes for its flexibility and its ability to provide important features such as eSignatures and cybersecurity for a fast and efficient digital lending platform. To learn more about our lending solutions, click below to get the FLEX Digital Lending eBook.