8 Minutes Read.
While credit unions have typically been slower at adopting new fintech solutions, this fact is changing. 2018 was a great year for financial innovation, with technology making processes faster, more productive, and more customer-friendly. Credit unions are increasingly recognizing the advantages of tech-driven lending solutions and are looking to deploy them in their own operations. For credit unions that are exploring tech solutions, the experience of online lenders is a great source of practical information. This article will identify tech trends driving the market, strategies proven to be successful by credit unions, and how tech solutions work to benefit the lending process and customers.
Focus On Integration
Fintech solutions are more aptly equipped for managing data and creating automated lending solutions. Why? Fintech solutions uniquely integrate products and processes, allowing for greater efficiency and connection with the consumer. There are benefits to both sides of the customer-institution equation:
- Shift from sales-oriented to inbound marketing – In many respects, fintech makes selling the credit union’s products easier. Customer data can be analyzed to tailor product offerings on a more customer-specific basis.
Credit union loan originators and salespeople focus more on “what the customer is looking for” rather than “what we have to offer.”
- More efficient use of internal data – Data integration allows for faster cross-checking of loan applications and other business with the credit union. This also increases the accuracy and usefulness of credit scoring, eliminating the need for additional data from the customer.
- Improving multi-channel capabilities – Credit unions can more easily develop and deploy multi-channel customer interfaces, such as web and mobile apps.
Partnerships Are Critical
Current fintech trends point to the need for partnerships between credit unions and technology providers. For technology providers, partnering with a respected credit union encourages development by augmenting trust in their products. Likewise, credit unions are able to offer customers new and advanced products. Partnering with fintech providers offers two basic benefits to credit unions:
- Getting ahead of the competition – In many cases, credit unions seek partnerships with fintech developers to reduce competition in the online lending space. Credit unions benefit from access to technology, while fintech providers gain stable market access and avoid intense competition.
- Economic practicality – For credit unions with legacy systems, or systems with relatively basic capabilities, partnering with software-as-a-service (SaaS) providers saves money and resources. Credit unions can have an automated lending solution up and running in a matter of days, eliminating the need for heavy investments in system infrastructure or human assets.
While tech solutions increase efficiency, greater attention must be placed on cyber security. Credit unions are taking proactive measures to safeguard customer data. Recent procedures include data tokenization, segmenting networks, and applying analytics to system user behavior. Furthermore, cloud-based solutions offer an added layer of data security. This helps to fill in the gaps in a credit union’s security coverage.
Innovating Processes And Customer Experience
According to a widely-cited study by McKinsey and Company, 65 percent of customers interact with their banks at least once a week through multiple channels. Interestingly, the study found that 60 percent of customers are also more likely to conduct business through branch visits. This implies that customer service in the traditional sense of human interaction is as important as ever. More importantly, this is one area where automated lending solutions can offer their biggest advantages:
- Automation relieves people of “routine” work – AI-driven systems can manage ordinary loan applications and free up personnel to focus on more irregular or complicated cases. As a result, credit unions can increase work volume without incurring any additional costs.
- Automation reduces the risk of errors – Automation eliminates the need for manual entry and reduces the risk of error on the lender’s part. Even in cases where the customer enters incorrect information, AI learns to detect patterns in data and identify errors. Subsequently, the system can automatically request the correct data from the customer, minimizing additional processing time.
- Automation helps to reduce operating costs – Automation reduces the credit union’s staffing needs as well as maximizing the capabilities of existing staff. Automated systems are also designed to be “user-friendly,” with intuitive interfaces for both staff and customers. In effect, this reduces the amount of time and resources needed for training.
Automation Allows A More Dedicated Focus On Customer Service
Through automation, credit unions can devote more of their resources to personal interaction with customers. As the McKinsey study indicated, this is precisely the sort of customer experience a majority of clients prefer, and what will keep them returning for new business.
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