Digital Lending How Digital Lending & Human Touch Go Hand-in-Hand


How Digital Lending & Human Touch Go Hand-in-Hand

digital lendingIn an age of two-day Amazon delivery, instant Google search, and personalized lending offers through Credit Karma, your members are no longer satisfied with a slow back-office lending process that takes days to weeks. Instead, credit unions must modernize their lending with a digital loan origination system and powerful analytics.

As the lifeblood of your credit union, it makes dollars and sense to invest in a dynamic loan origination system that manages and automates the end-to-end steps in the loan process. The loan origination system can handle everything from initial application through underwriting, approval, documentation, loan pricing, loan funding, administration, and any other individual steps baked into your credit union's process. While digital transformation, automation, and AI are often placed at odds with human interaction at financial institutions, this isn't the case for credit unions. In fact, a digital loan origination system and the human touch go hand in hand. Let's look at how.

Why Utilize a Digital Loan Origination System?

Having a robust loan origination system is the key that can unlock a plethora of benefits for credit unions, starting with increased loan volume. It can empower your credit union to deliver a hyper-personalized experience through the integration of existing member data. In addition, a digital loan origination system can help credit unions:

  • Reduce abandonment rates,
  • Attract new members while retaining existing ones,
  • Improve KPI and metrics across all lines of business,
  • Boost non-interest income through a fully-optimized digital lending experience,
  • And more!

But It's Always About the Member Experience

Most importantly, the use of a digital loan origination system can help improve the overall member experience — not decrease it. When fast and frictionless experiences are mated with the best-in-class human interactions of your credit union, it equates to the proverbial win-win.

Get the Best of Both Worlds: Speed & Accuracy

As industry disruptors evolve member preferences and expectations, Fintechs are increasingly gaining market share. Fintechs offer customers a sleeker user experience, faster funding, and near-instant decision times. In July of 2021, Experian reported the Fintech total share of the unsecured loan space (particularly for under $50,000) reached a record high of 57%, which was a significant jump over the previous year. Fueled by Silicon Valley money, Fintechs are showing no signs of slowing down.

While Fintechs like Upstart, Sofi, and LendingClub may have slightly different lending criteria, much of their growth can be attributed to the frictionless experience. And credit unions can unlock their own iteration of this experience with an integrated digital loan origination system. In addition to reducing friction in the process, it can free up lending personnel, so they can spend more time creating meaningful engagement points with members.

Research continues to reinforce that members want seamless digital experiences and self-service options. Even so, it doesn't supplant the importance of human connection, especially for:

  • Older members who are still holding the bulk of the nation's wealth, and
  • More complex transactions, such as auto loans, mortgage loans, and other consumer lending products.

Gain Better Digital Insights to Improve Member Experience

While utilizing advanced digital tools and analytics — at first glance — may seem as to limit human contact and erode the member experience. Yet, this isn't the case. With a digital loan origination system, credit union staff can leverage insightful reports to gain a new perception of members. For example,

  • Loan officers and credit union tellers can see individual members on a micro level, while
  • Leadership can view members at a macro level based on geography, demographic criteria, and other parameters.

In either case, this valuable information can be used to make smarter, more cost-efficient data-based decisions.

Digital Lending Is No Longer a Nice-to-Have — It's a Business Imperative

The right loan origination system can be a powerful tool for credit unions, enabling you to drive greater efficiency and improved member experiences. And when your best-in-class member service is combined with the efficiency of a loan origination system, credit unions can easily gain a leg up on the competition, including Fintechs and big banks.

Download the FLEX Digital Lending eBook to explore mapping the member journey, digital application best practices, security topics to consider, analytics tips and tricks, and marketing insights.

FLEX Digital Lending

Preston Packer

Written By: Preston Packer

Executive Vice President | CMO at FLEX Credit Union Technology
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