The trend toward digitizing business operations to eliminate labor-intensive and time-consuming paper processes is more than just a passing fad. It has, in fact, grown into a revolution with wide-ranging adoption of innovative digital technologies throughout entire organizations. Driven by a digitally-empowered consumer, companies today must reshape themselves to meet the performance benchmarks set by digital pioneers like Apple, Uber, Amazon and Google. Credit unions that focus on offering similar seamless digital experiences can successfully ride this Digital Wave and improve the consumer journey as well as reduce costs and increase member loyalty.
The Case for Digital Innovation
According to McKinsey, financial institutions that do not adopt digital innovation stand to be punished by account holders who increasingly rely on and demand digital connections. The company’s research suggests that financial institutions that are “digital laggards” could see net profits erode by as much as 35 percent, while innovators could see profits grow as much as 40 percent or more. As the McKinsey researchers concluded: The urgency to innovate is acute.
Many financial institutions are heeding McKinsey’s advice and adopting digital strategies to adapt to the fact that consumers and businesses alike are shifting their banking preferences to online and mobile solutions. (https://thefinancialbrand.com/75286/chase-digital-mobile-banking-strategy/). MX Technologies reports that 38% of consumers have reduced how often they bank somewhere because of a poor digital experience (https://pt.slideshare.net/MXenabled/2016-banking-trends/44).
So how can credit unions ride the digital wave, especially when they may lack the resources of larger institutions?
One area where financial institutions can apply digital technology that makes a significant impact is with small business loans ranging from $50,000 to $250,000, and small dollar, short-term consumer loans from $100 to $1,500. Using digital lending technology offers financial institutions the opportunity to improve productivity, close more loans and increase revenue per loan with cheaper, faster and automated services.
However, the technology must be more than simply digitizing parts of the loan process, like offering your loan application or balances and payments online. The type of digital lending technology that truly embraces digital innovation and resonates with members is one that provides an end-to-end process that fully automates origination, application, underwriting, funding, loan review and administration.
The technology utilizes member data—including checking and deposit activity—to speed up the underwriting process, while staying within institution risk tolerances. It embraces cloud computing to make the entire process seamless, thereby improving the member experience. It handles all documentation online using electronic signatures. It books the loans directly to your core. The digital experience is not only easier for the consumer – it’s easier for you too!
Ride the Wave with the Right Digital Partner
A 2015 study by Bain & Co. recommended financial institutions “boost investments in digital lending to avoid a material decline in profits and loss in market share.” Fortunately, end-to-end technology that breaks through IT development barriers is readily available through proven third-party providers.
In making a decision to partner with one of these providers, seek one that:
- Provides a secure, Software-as-a-Service (SaaS), end-to-end platform that is core-agnostic.
- Allows account holders to obtain small business and consumer loans from application to closing, entirely online.
- Ensures your credit union retains control over the decision, pricing, credit policy, risk metrics, loan dollars and account holder experience.
- Automatically books loans and funds them through your core.
- Provides an attractive, brand-able omnichannel borrower portal.
- Facilitates approval in minutes and funding within a day or less.
- Monitors loans, deposit activity and credit information.
- Handles loan renewals.
- Is endorsed by respected industry associations that rigorously vet the programs they support.
And your credit union can “hang ten” on the Digital Wave.