Today’s consumers have turned to digital solutions to handle all sorts of daily transactions. Unsurprisingly, e-commerce and the use of digital wallets have soared, and so have fintech companies that offer digital banking and digital lending services. Credit unions must keep pace and adapt to the changes in order to thrive.

The game has changed for credit unions when it comes to how they service their member’s needs, especially in terms of digital lending. Because of the rise of fintech companies and app-based financial services, credit union members now want access to fast and easy digital lending services. Although that doesn’t mean branch visits and personalized attention are a thing of the past, CUs who wish to compete and thrive in the future must come up with a well-thought-out digital strategy.

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.

As credit unions turn to digital solutions to meet their member’s changing needs, in-branch transactions and manual processes are rapidly becoming a thing of the past. Such digital transformation throughout the financial world is here to stay, and CUs must adapt to survive and thrive.

2020 has been an unprecedented year for businesses and financial institutions around the globe. Nearly everyone's bottom line has been affected by the pandemic, and credit unions, like all businesses, have had to be agile and adopt new practices in order to survive.

One area that has always been crucial for the profitability of credit unions (and now even more so) is lending. Credit unions that sustain profitable and healthy lending practices have a leg up on the competition and will be around for a while, and those that don’t, will run the risk of dying a slow death and ultimately weighing out their merger options. 

Collaboration and cooperation have always played major roles in the credit union ethos. One of the best examples of that philosophy in action is participation lending, which is when credit unions band together to back a loan to a single borrower. By doing so, credit unions can share the risks and rewards. For many credit unions, mitigating risk is vital, and so is the spirit of community that can be enhanced when rewards are shared.

People are impatient. When they ask a question, they want an answer as quickly as possible. Technology has led them to expect things instantly, and that includes the decision on a loan for something they'd like to buy. They want it now! With the goal of shorter turn-around times, and capitalizing on the revenue a new loan brings, many credit unions have turned to auto-decisioning to expedite loan processing and increase efficiency. In most cases, auto-decisioning makes sense, provided there is enough tracking, measuring, and monitoring in place to ensure that it's working appropriately. Without these safeguards, financial institutions take the chance of increased risk in their loan portfolios.

Throughout life there are situations - life events - where money plays a significant role in the decision-making process, and a positive resolution is dependent on the availability of funds. In certain cases, where the resolution requires more money than what may be available, an already stressful situation can feel frustrating and overwhelming. But what if a financial institution knew their member personally, and was willing to take a look at special situations to see if they could lend a hand (or money) to assist that member? Take a chance on a member with a long standing history and make a difference to them? This is the embodiment of the Credit Union Difference.

The loan-to-share ratio can be deceiving. It’s calculated by dividing the total amount of outstanding loans by the total amount of share deposits. While this ratio serves as a good indication of a credit unions liquidity, it also shows the level of risk a credit union is willing to take on. Generally speaking, credit unions with a high loan to share ratio are taking on more risk to increase their profits. At the end of Q2 this year, the national loan-to-share ratio reached an all-time high since 2008. On December 31, 2008, it was 83.2% but continued to decline from that point on until it bottomed out in 2013. Since then, the loan-to-share ration has been climbing, and 10 years later it’s finally back up to 82.9% as of June 30, 2018. While things are looking up for the nation as a whole, the loan-to-share ratios actually differ by state, with a few standouts:

There are many ways credit unions can choose to operate their lending process, however, not all methods are created equal. A centralized lending strategy can provide a clear and concise plan for lending that eliminates problems associated with other methods. With other lending practices, there are opportunities for error, not to mention the additional cost that stems from inefficiencies and training. Centralized lending helps to diminish these issues while maximizing employee skills as well as their time. Here are six reasons why centralized lending is the best route for credit unions.