Despite popular belief, digital lending has actually been around for quite some time. It began in the 1990s around the dot-com era with digital mortgage and consumer lending. While it wasn’t a popular solution back then, digital lending today has come full circle. Many financial institutions offer digital lending in some capacity. A recent survey by the ABA shows that digital lending could for 10% of all consumer and small business lending market by 2020. Despite this, there are many FIs that do not offer it, or they only offer digital options for part of the lending process. While those banks and credit unions have certainly gotten by without full digital lending, they are missing out on features and opportunities that it can provide. Here are 5 ways that digital lending can improve your credit unions lending process.
In any industry, executives and CEOs look for consistency. Process consistency leads to fewer mistakes and higher levels of efficiency. The financial industry is no different, and credit union CEOs are looking to make lending approval processes more consistent. Fully integrated digital solutions for loan originations create consistency, as well as provide access to data metrics and trends to help review and refine the process.
Completely digital lending can reduce overhead costs significantly, which translates to greater efficiencies and time savings for your staff. This means staff can spend more time in one-on-one meetings with members and engaging with their community. Higher efficiency also generates more revenue as staff will be spending their time more tactfully and your CU has more opportunities to grow.
Due to increases in efficiency, expenses decline and staff becomes more profitable. Especially if the staff is channeling their newly free schedules into projects that were set aside due to time constraints. Ultimately, increased profits are a result of cost savings and more revenue. With digital lending, both of these elements will come into play, thus increasing profits for your credit union.
Analytics features allow several different key metrics to be monitored in the lending process, such as conversion rate, application abandonment, page view duration, and geographic location. Analytics also enable CUs to keep track of risk rating analysis and CECL reporting, depending on their use of the lending system. These monitoring features go beyond the scope loan origination and provide insight into areas that many credit unions fail to analyze.
With better reporting and analytics comes more shareable data. Loan participations can be improved through shared analytics. Performance dashboards create an environment where participants can access reports remotely with no leg work running and re-running reports.
Digital lending provides the full experience that members want while improving credit union operations on the back end. With full digital lending platforms, credit union management can rest assured things are operating smoothly even when they’re out of the office. Digital lending has come a long way since its inception and the technology and offerings are only going to continue to improve. digital channels have allowed financial institutions big and small to grow, become more focused, and create a consistent lending process for members and staff.