One of the big takeaways from 2020 for credit unions was that digital banking services are not only going to be important for the future, but they’re also essential right now. To satisfy members’ expectations and compete with the rise of fintech companies, CUs must choose the best technologies and continue to enhance their digital banking capabilities. One of the most important elements of credit unions’ digital banking future will be offering competitive digital lending services.
Digital lending has seen a surge in popularity over recent years and the pandemic has only accelerated the transformation. Digital lending is popular with members not only because it avoids in-person interactions but it can also make the process of applying for a loan much easier and faster. Furthermore, digital lending has proven to have higher conversion rates than traditional lending, meaning more people who start a digital loan application are more likely to finish the application. Let’s take a look at some of the other benefits of digital lending platforms.
How can a fully digital lending platform improve my CU?
As the world turns digital, borrowers no longer have the patience to work through complicated legacy lending systems. Paperwork, phone calls and in-person document signings have never had high rates of success, and with the acceleration of technology, the increased use of mobile phones, and the infiltration of fintech companies into the banking space, it would not be farfetched to say legacy lending could be a thing of the past. What is certain is credit union members now want quick, easy, digital access to loan applications.
Understanding member expectations and the benefits of a digital lending platform are the first steps towards transforming your credit union’s digital offerings. Here are some of the most important features to consider with your digital lending platform:
- Seamlessness. In the past, legacy lending systems involved mailing in paperwork, meeting with CU employees to sign documents, and talking over the phone. The multi-faceted, complicated nature of the process turned many members away. The new expectation is to be able to do the entire loan application online, in one frictionless experience. Members want to be able to sign applications, upload supporting documents and have their loan decision returned to them in the same user-friendly browser. To do this, CUs need the right core system technology.
- E-Signatures. This is one of the cornerstones of digital loan applications. Without eSignature capabilities, members must visit a branch or mail in their documents, and the speed and efficiency of digital lending are lost. The right core provider can allow you to send, receive and archive eSignature forms and documents right from the core.
- Cross channel support. Your digital lending application should function seamlessly whether it is accessed from a computer or mobile device. The look, feel and branding should be consistent no matter what kind of device is used.
- Simplification. One reason the legacy lending system can deliver low attrition rates is because applicants find it to be too complicated. Although it’s important to get as much data as you can from prospective borrowers when they are filling out online loan applications, you do not want to overwhelm them with pages and pages of information. Instead, simplify and highlight the data fields that are necessary so that members and potential members know which fields are required before proceeding. Additional data can be acquired later.
- Speed. E-commerce and the use of digital wallets soared in 2020, as people sought digital solutions to handle transactions that were traditionally done in person. With the rise of companies like Amazon, Uber, Airbnb and fintech companies like PayPal and Venmo, people have become accustomed to one-click shopping and other immediate services. Members no longer want to wait weeks or even days to find out if they’ve been approved or denied a loan. Instead, they want to know within hours or even minutes. Digital lending platforms must be able to deliver results quickly and efficiently.
- Security. Digital lending means CUs must be able to take in member information about employment, income and other personal information. This means that cybersecurity is essential for credit unions moving forward. A credit union core provider can securely collect and organize member data to enhance the member experience during digital loan lending applications.
Lending has always been crucial to the survival and growth of credit unions, and though the method of getting members loans is changing, lending will continue to play a vital role for credit unions. By enhancing your credit union’s digital lending services, you will not only satisfy your member needs and stay competitive with the market, you can also save the credit union money, free up time for employees and attract new members so that your CU continues to thrive and grow.
Choosing a quality core system technology
In order to compete with fintech companies encroaching into the banking space and to keep up with member expectations, many credit unions partner with third-party fintech companies to help meet their members’ needs. However, this has the potential to create a fragmented online banking experience where members must go through multiple digital channels to apply for a loan.
With the right credit union core software, your credit union can create a seamless digital lending experience that integrates all your online banking services into one user-friendly experience. FLEX credit union core software has been chosen by credit unions of all sizes to deliver the best digital account services and improve their digital lending capabilities.
