There's no ignoring a new brand of competition making a "rocket" fast rise in popularity: digital lenders that provide an exclusively online loan experience. The Global Digital Lending Platform Market size is expected to reach $11.6 billion by 2025, and CUs would be remiss if they passed on the chance to grab a piece of that. One could argue that this could mean bad news for credit unions, who sometimes have more limited resources compared to the big banks or larger FIs. Fortunately, many CUs and their technology partners have been preparing and innovating for years making the digital playing field a familiar realm.
This is a natural progression of the many digital integrations we've made to date. It's time to join the fray and continue to prove to that credit unions can provide the same products other lenders can, but with better service. So, how do we make the most of this opportunity? With a plan.
Evaluate Your Digital Lending Capabilities
Take a look at your CU's digital toolbox. Have you integrated eSignatures into your daily operations? Do you have an app or website that allows for secure, real-time financial transactions and online loan applications? Do you offer secure chat with MSRs, allowing members who have questions to get answers fast? We're guessing you have some of these or are planning to in the coming year. Perhaps you even offer a completely digital loan process for your members already. All of these pieces we've been putting into play to reduce friction in the member experience will help build the foundation of your digital lending process.
Strategize to Fill the Gaps
After you assess where you are, you need to decide what holes you have in the process. What pieces are you missing to make the entire loan process, from start to finish, fully digital? Have you considered Automated-Decisioning? Human review is likely to slow the process, and slow is exactly what digital borrowers are looking to avoid by going digital in the first place. Also, if you have a great core processor, look at your data. What can you learn about your members from their information that might show you the lending options that they will benefit most from? If they only use online banking, maybe digital lending is a product they need to know about.
Plan the Path Forward
If you want to have a fighting chance of gaining market share in the digital lending arena, you need to create a process that's easy to use, moves forward quickly, and gets funds to borrowers fast. You need to map a timeline of what technologies and solutions you're missing, what it will take to implement them, and what it will cost. This is an opportunity that no FI should, or will, ignore. The earlier your CU gets your foot in the ring, the farther ahead of the competition you'll be.
If you're reading this and thinking you don't even have the fundamentals, let alone a streamlined end-to-end digital lending process, then maybe it's time to look into a better core processor that gives you the options you need to build the technology your members will demand and your CU will need.
Download our Digital Lending eBook to learn more.