Credit unions are continually tasked by their boards with optimizing the performance of their loan portfolio. Today’s low-interest rate environment is continuing to drive both interest and volume at many credit union loan portfolios, making improving loan portfolio optimization more important than ever.
According to Celent, here are three ways to improve your loan portfolio performance with member experience top-of-mind:
- Give members what they want!
Recent research from Celent showed that U.S. financial institutions reported a 41% increase in real-time payments during the pandemic. With consumers from 2,000 financial institutions in the U.S. already using Zelle, it’s clear that demand for real-time payments is already here. Offering real-time payment products could particularly be the key for your members who seem like consumer account holders on paper, but are actually small business owner members. By offering real-time payment options, such as real-time disbursements, or Any2Any account transfers, you are giving the members more control over their money movement needs any time of day, which brings us to the next point.
- Give members control over their finances
Traditionally, late payers were penalized with large fees for missing their payment due dates, sometimes through simple faults in the clearing and settlement offerings in the bill payment ecosystem (we are looking at you ACH). Members now have an alternative for expedited payments, giving them the full procrastination window of the due date, not just the 2-3 days in advance an ACH payment requires, or a full week for a check to be cut and sent. Coupled with an ability to diarize (request on a future date) payments, members should never be caught by surprise by having to pay a late payment fee again. For credit unions, real-time has many advantages—better margins, better insights, and of course, receipt of funds faster (and in the case of TCH’s RTP irrevocable). Also, flexible channels and payment options such as pay by text or pay by AI assistant make it easier, and therefore more likely for your members to pay their loans on time.
- Utilize Request For Payment
Request For Payment (RfP), a message capability that has entered the market with the push based real-time payments (e.g. Zelle, RTP, and soon to be FedNow), adds additional functionality to real-time payments beyond the payment itself. Real-time isn’t just about speed, it’s also a data rich messaging system that supports “chatter based” payments. Using RfP to open up a conversation with your member, whose payment account resides at another institution, allows the member to have better control over their finances by either choosing when they want to pay and directly from the source of the payment itself. That flexibility could greatly improve collection rates, while offering a higher level of security in the payment workflow as the payment messages are not going over a channel like SMS or email. Instead, they go directly through the payment channel to another financial institution, to be viewed by the account holder in a secure location. In addition, because RfPs are tied directly to the transaction itself, it saves credit unions on reconciling invoices and lowering the number of checks and processing costs associated with manual processing.