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13Aug

The Digital Transformation Revolution – Is It Leaving Credit Unions Behind? Part 3

The Digital Transformation Revolution – Is It Leaving Credit Unions Behind? Part 3

Is your credit union’s “digital lending experience” just an online application or is it an extraordinary, end-to-end experience?

 

Surprisingly, 83% of credit unions indicate that they are offering digital consumer lending and 55% respond that are offering digital mortgages. Automated loan decisioning has the biggest impact on both the balance sheet and the consumer, but only one-third of credit unions are using data and machine learning to automate their lending.




 

That’s right. Seventy percent of loans are manually decisioned at credit unions. Seven out of 10 credit card loans, auto loans and personal loans are manually assessed.

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Today’s lending service is powered by data and defined by better lending decisions. Loans are completed faster and risk criteria is consistently applied through auto decisioning via advanced loan originating systems. 

Anything short of this holistic digital lending requirement will lead to fewer loans, riskier loans, costlier loans and members who are less satisfied. Who wants to go into a branch or call a member service center to get a loan in today’s mobile world? Just gathering lending data online no longer cuts it in a digitally transformed world. That’s not digital end-to-end and it’s not a true digital offering.

Credit unions are trying to live in two worlds. The old-world manual loan decisioning has become more and more suspect with membership expansion beyond original sponsors, while the new world provides a true digital member experience. Trying to live in both will not work as credit unions move forward. 

The win in everything digital is a fast, easy, thorough, data-driven process, not just a slick user interface with lots of questions and a multi-hour or multi-day decisioning process!

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Sixty percent of credit unions do not have a digital lending strategy and it shows as only 30% of the loans are processed digitally in two-thirds of credit unions. That’s an incredible statistic given less than 33% of millennials go into a branch or use a call center (Financial Brand). 

Digital lending strategy should be every credit union’s priority, but to date most lending strategies (60%) have not been updated to the same degree as online and mobile banking strategies. 

Digital lending is where credit unions make money, serve a majority of their members, have hyper competition and where data can provide material advantages. Credit unions can take their unique member perspective, automate it, and improve all aspects of the lending experience.

A screenshot of a cell phone

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A screenshot of a cell phone

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Read Part 1 here: https://www.big-fintech.com/Media/Blog/ArticleID/437/CEO-Perspective-on-voice
Read Part 2 here: https://www.big-fintech.com/Media/Blog/ArticleID/440/Digital-Transformation-part-2

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