Navigating the gap: Revisiting predictions for digital lending in 2024

In January, MeridianLink^® conducted a survey of nearly 100 financial institutions to gauge their expectations and priorities for 2024. Now, as the year draws to a close, it's time to reflect on those predictions—not only to measure their accuracy but also to identify lessons for navigating the dynamic landscape of financial services in 2025.

Revisiting these expectations is a valuable strategic exercise—creating a space to highlight successes and identify areas for improvement as MeridianLink and its customers finalize their plans for the new year. While many forecasts aligned closely with this year’s reality, others proved more nuanced, emphasizing the importance of adaptability when setting strategic priorities and level-setting for 2025.

Industry data confirms that foot traffic at branches continued to decline, prompting many institutions to reduce their physical footprints. In our survey, 64% of respondents predicted that physical branches would play a diminished role in 2024 as digital solutions took center stage. This forecast largely held true. Yet, the role of branches has not disappeared entirely. Instead, they have become critical hubs for complex financial services and for serving demographics less comfortable with digital channels, such as older consumers or those living in rural areas.

This evolution underscores the need for credit unions to invest in cohesive omnichannel experiences, allowing members to easily conduct business across physical and digital mediums. While digital-first solutions capture the convenience modern members expect, physical branches will continue to remain indispensable for delivering high-touch, face-to-face services. Credit unions must focus on creating synergies between these channels, ensuring a seamless experience regardless of where or how members engage.

Economic uncertainty has been a defining feature of 2024, and it proved a top concern for credit unions and their members this year. Nearly one-third of respondents in our survey foresaw an increased need for credit card debt consolidation and management, driven by inflation and high interest rates. Federal Reserve data confirms that credit card debt increased this year, with delinquency rates remaining elevated as well.

Institutions that expanded their debt management offerings—through services like automated debt consolidation tools—saw increased member engagement and retention. However, the challenge remains significant. To meet these growing needs, credit unions must adopt proactive, technology-driven solutions that empower members to regain control of their finances. This not only strengthens trust but also enhances long-term member loyalty.

As financial services continue to grow increasingly digital, so does the importance of providing tailored, consistent experiences for members. Nearly half of our respondents highlighted the importance of omnichannel solutions for engaging members, while another 25% emphasized the need for personalized financial services. These priorities reflect rising member expectations for seamless, integrated experiences.

While some institutions have made great strides in this area, personalization of services, in particular, remains uneven. Despite advancements in data analytics, many financial institutions still fail to operationalize insights effectively. As a result, members often encounter fragmented experiences that undermine trust and satisfaction.

The key to progress lies in leveraging data platforms to glean actionable insights and deliver tailored services across multiple channels. By fully embracing tools like these, financial institutions can close the gap between aspiration and execution, meeting members’ expectations for consistency and care.

Artificial intelligence has emerged as both an opportunity and a challenge for financial institutions. Our survey revealed varying levels of readiness: 24% of respondents planned to use AI for data insights, another 24% for automating routine tasks, and 19% for enhancing customer service. However, nearly 30% had no immediate plans for AI adoption.

This year, we’ve seen larger institutions successfully deploy AI for fraud detection and customer engagement. Smaller institutions, however, have faced barriers, including resource constraints and regulatory uncertainties. For these organizations, partnerships with fintech providers can provide cost-effective paths to AI integration. Additionally, clearer regulatory frameworks will be essential to unlocking AI’s full potential across the industry.

Looking back, the predictions we explored in January largely reflected the trends that shaped 2024. However, as is true with all forecasts, their value lies in the actions they inspired. Institutions that embraced these insights were better equipped to navigate challenges, from rising debt pressures to evolving member expectations.

As we prepare for 2025, credit unions would be wise to revisit their strategic approach to reevaluate their assumptions about the industry and their members, best practices for engagement and retention, and technologies they use to provide their products and services. By building on the lessons of 2024, we can meet evolving member expectations while driving sustainable growth and innovation.