How to overcome the challenges of consumer loans for profitability


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Have you ever imagined a time when you could buy a car online and have it appear in your driveway a few days later? Today, many of the tasks that consumers once performed in person, such as shopping for groceries or dining out, have been transformed by digitization.

The coronavirus pandemic has only accentuated this radical shift towards high-tech and low-touch online offerings. The disruption in retail has also affected retail banking. Members want it quick, simple, and easy. However, making that expectation a reality is easier said than done, as a typical credit union’s consumer lending process can involve many different systems, people, and processes.

Many credit unions have demonstrated their agility on the side of commercial or corporate loans during the pandemic with the Paycheck Protection Program (PPP). For credit unions to participate in P3s, they had to become more technologically savvy to cope with the changing needs and expectations of members throughout the waves of the pandemic. A similar transformation on the retail side will be needed to be successful in consumer credit in today’s environment.

Automate consumer loans to become more competitive and profitable

Retail banking is increasingly competitive, especially with the influx of fintechs like LendingTree and Rocket Loans. In this competitive digital market, credit unions will need to look to digital adoption to meet changing member expectations. Consumers can easily find information about the importance and ease of purchasing retail loans among online lenders and traditional financial institutions. So how will your credit union stand out and be the one it chooses? How can he compete?

The good news for credit unions is that they have already demonstrated their ability to take advantage of digital tools to create a better and faster lending experience. Scalability is an important aspect of becoming more competitive, faster, and therefore more profitable in the retail lending space. Repetitive manual data entry, physical requests and signatures, and prosecution of members for additional documents wastes valuable lender time and frustrates the member. For example, with the right technology, like a loan origination system (LOS), credit unions can transform inefficient processes for a frictionless lending experience.

With an LOS, credit unions can deliver a fully digital retail lending experience to their members, where they can quickly apply for loans, securely upload documents, and electronically sign a loan online anytime, anywhere. . User-friendly, member-centric platforms put the consumer in the driver’s seat, making it quick and easy to apply for their loan.

Meanwhile, the credit union can perform rapid analyzes and automate decision-making with an end-to-end digital LOS, helping to ensure efficiency, consistency and scalability. With a built-in relationship manager to track the pipeline of credit union members and notify lenders of upcoming tasks and automated workflow models, a LOS optimizes many areas of consumer lending. Credit unions that can make quick and creditworthy decisions give themselves a much needed advantage in a competitive consumer credit environment.

“With loan origination systems, you only have to touch the data once. One touch and it spreads, ”said Marc Meoli, solutions consultant for Abrigo. The lender can focus on new banking relationships rather than searching for documents and re-entering the member’s information. “This is how a credit union becomes more efficient and develops relationships,” said Meoli.

Technology is important for increasing efficiency, but buying it does not automatically make a credit union more efficient. It can be difficult to implement new technology, both from a technical and change management perspective, without proper planning.

A credit union looking to leverage a successful loan origination system will consider how it will integrate with other technologies already in place. Will this technology be another siled system, or can it integrate and “talk” seamlessly with other software already in place? Cross-application features and software will allow better optimization of data and reporting, and increase transparency.

A seamless system will also significantly contribute to membership and use among credit union users. To further promote adoption of an LOS, users should receive adequate training and support from the technology vendor. Managing the “people side of change” can help institutions maximize the potential of their level of service.

Promote a better member experience

Many credit unions were able to gain new members thanks to their rapid response to PPP. These institutions were the heroes of PPP, responding quickly to the program and implementing technology to adapt their processes to meet the high volume of requests. Being able to help these member companies through a difficult time has generated a lot of goodwill and loyalty from members – but can credit unions keep it? Can credit unions use the same approach they used to transform the PPP process for other areas of lending to foster closer relationships with members?

A key element of this initiative will be to move away from siled and disparate systems and invest in technology that enables a single point of data entry to help break down data barriers. Fully centralized and integrated data gives credit unions better insight – from areas of risk to growth opportunities – to make smarter, faster decisions.

Centralization, automation and efficiency gains are also important for better service to members. Consumers have quickly adapted to their new, remote way of life, reinforcing the importance of effective and efficient digital offerings. In the future, credit unions will have to make a conscious effort to provide high level service with remote delivery. Improving the member experience means meeting expectations with digital offerings.

Kylee wooten Kylee wooten

Kylee Wooten is Media Relations Manager for Abrigo, a compliance, credit risk and loan solutions provider based in Austin, Texas.

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