Our movement was born out of a desire to better serve our communities, and it’s likely that none of us remember feeling that need more acutely. During the Great Recession, credit unions were applauded for their continued lending and economic stimulation during the downturn. The COVID-19 pandemic brings even larger challenges, and credit unions will not be able to rely on business as usual to rise to the occasion. We’ve put together a list of actions for credit unions that are adapting to serve the needs of their members and drive impact in their local communities during these uncertain times.
Fast track projects to stand up digital capabilities for remote access
Many credit unions were already focused on making digital account opening and digital loan origination easier and more reliable. COVID-19 has transformed digital from a value-add to a minimum requirement in a matter of days. This includes, but is not limited to, online account opening, loan origination, or requesting assistance through self-service, automated channels.
With branches closed and members encouraged to stay in their homes, being able to open accounts and originate loans in this remote environment is essential to continuing to serve the membership. With integration into many of the leading digital innovators, platforms, and partners serving credit unions, TransUnion can help credit unions quickly launch or optimize digital account opening or loan origination capabilities. We’ve been encouraged by the strides taken by credit union industry partners, companies like SavvyMoney, CuneXus and Rate Reset, to swiftly enable CUs to implement new loan products and distribution channels via digital experiences.
Identify members in need and continue extending credit
This is where understanding who members are — and their potential needs — becomes so important. Many people are making day-to-day decisions right now; they’re not spending time thinking about whether or not they have the right financial product.
Pulling back on fees is a great way to demonstrate flexibility and to keep a few more dollars in peoples’ pockets in times of need. In addition to measures like that, we’re expecting many institutions to take more concerted efforts to provide flexible solutions to help people in their community.
Lenders that want to make an impact are taking a proactive look at their portfolios and identifying where early outreach is the best option. Many are also segmenting and prioritizing their portfolios for effective management in the weeks and months ahead. They’re looking for people with mortgages who could benefit from a lowered monthly payment or may have untapped equity to refinance and firm up other monthly obligations. They’re evaluating credit card portfolios for people who would benefit from a line increase. They’re thinking about rolling out short-term liquidity loans or other vehicles cited in a recent NCUA letter to those who would benefit and not be overburdened.
Credit unions can leverage robust trended and alternative credit data to better identify members with evolving financial needs. With a fluid economic situation and potential changes in consumer incomes, credit unions should consider risk solutions that help them safely expand access to credit to those who need the help but also have the capacity to repay the loan.
Get a handle on individual member scenarios, member needs and optimize outreach
With unprecedented uncertainty and volatility across markets, credit unions are being called upon to help members through challenging times. To start, credit unions should consider using the most current and accurate credit data to identify, segment, and prioritize those members most at risk. Using that data, credit unions can develop targeted outreach strategies, new product needs, and communication plans.
Not only can segmenting and prioritizing accounts help build loyalty by personalizing both communications and offers for assistance, but it can help prioritize collection efforts in the future and mitigate potential losses as well.
Over the last several years, both data and technology have evolved significantly, giving lenders new information to monitor portfolio health. For example, trended credit data can help credit unions identify members’ signs of financial distress, allowing credit unions to proactively offer forbearance, modifications, refinancing, or other remedies.
Protect credit union assets against ever-evolving fraud schemes
With consumers preoccupied with health and safety, many credit unions are understandably focused on business continuity and adapting to changing economic circumstances. But credit unions need to be prepared to combat increasingly more complex fraud threats. Implementing solutions like device recognition and synthetic fraud risk models — especially those available through existing platforms and applications — enable credit unions to match and link digital identities to physical identities. Doing so can remove friction from the member experience while simultaneously defending against today’s most sophisticated fraud schemes. These kinds of investments in digitally-optimized fraud capabilities and delivery options means fewer disruptions to the member experience, too — something that’s very important during times of economic uncertainty.
Much like the 2008 financial crisis created opportunities for credit unions to prove out their philosophy of “people helping people,” the COVID-19 pandemic provides an opportunity for financial cooperatives to step up and help members again. Swift and immediate action can position credit unions as a key partner to the communities they serve. Extending timely, relevant and personalized assistance, optimizing digital channels, and protecting against emerging fraud threats are immediate steps each credit union should consider as we collectively navigate these uncharted waters.