The secret sauce for avoiding a ‘fintech apocalypse’

Four ingredients can make members’ lending experience meet their expectations.

In my recurring apocalyptic nightmare, startup lenders–backed by venture capitalists–overrun the traditional financial services sector. In the aftermath of their marketplace attack, the now-barren lending landscape contains the sad remnants of once powerful cooperatives that mistakenly placed too great an emphasis on “great service and low price,” in a world now obsessed with speed and ease of use. It’s the start of the fintech dynasty.

OK, that’s a little over the top, but I do think we need to focus our attention a bit more on the hordes of cash being fed into these startups, as 2015 proved to be another record year, and we’ll see more of the same in 2016. Wall Street clearly sees a weakness in how lending is done today. And I’d be hard-pressed to argue they’re wrong. As a whole, I don’t think credit unions and banks have taken into account the high expectations of their future borrowers.

To understand how consumer expectations have changed, simply look at Amazon’s Prime Now. A one-hour delivery service isn’t solving a serious societal problem (you don’t need this by noon today). It’s more about Amazon recognizing our new culture of immediate gratification and impatience. We went from wanting it fast to expecting it fast. I can’t imagine my life now without instant movie rentals, mobile coffee orders, and one-click buying.

Consumer expectations have changed, but credit union lending hasn’t kept up. A personal experience brings this to light: I applied to refinance a small auto loan from an out-of-state lender to a local credit union (bank local, right?). I’m gainfully employed, financially responsible and have stellar credit. That’s a slam dunk. Yet somehow my experience proved strangely time-consuming for both me and the credit union. No mobile application. No pre-fill of data. No instant online approval. No quick call-back. No online documents. No killer offers to steal the rest of my accounts. Disappointing.

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