By Michelle Perez, Director, Product Management, and Candice Duncan, Manager, Client Services
Lending products have long existed as bread-and-butter offerings for most credit unions. Even as the fabric of the financial services quilt becomes more colorful, consumer-friendly loans from people-centric lenders continue to play a very important part in the financial lives of members.
To provide borrowers the most attractive lending options, however, credit unions need to apply the same digital mindset to lending that they have to other products and services. This often results in stronger and more seamless connections between loan products and a member’s overall credit union experience.
One of the most affordable and executable ways a credit union can achieve this is through enhanced contact center support. By integrating lending services with things like credit and debit card support, credit unions achieve a range of efficiencies while tapping into an expansive borrower marketplace.
Credit Union Lending Remains Strong with More on the Horizon
In the third quarter of 2022, total loans outstanding among federal credit unions alone increased 19.2 percent year over year to $1.46 trillion, according to the National Credit Union Administration (NCUA). This growth encompasses rising loan balances rose across all major categories.
Although credit union lending has remained strong, there is an even greater opportunity out there. Tapping into the opportunity is easier with an organic growth strategy. Members who already know and trust the credit union for their day-to-day services, like deposits, credit/debit cards and digital payments, are primed for deeper engagement.
That’s not to say winning the lending business of members is easy. Even among long-time members, credit unions face tough competitive pressure from new entrants to the lending market, as well as pressures from digitalization of nearly every step in the lending process.
Members have a new set of expectations. Meeting them takes intention and a willingness to meet members where they are.
Any Time, Any Place Lending for Competitive Positioning
Above all else, meeting members where they are means offering 24/7 availability. Today’s borrower insists on applying for loans on their own timetable. To be sure, there are plenty of digital-native lenders making themselves (and their money) available at the tap of a screen, whether it’s 2 p.m. or 2 a.m.
Meeting members where they are also means offering omni-channel options. Whereas one borrower will only be comfortable applying in person, another would rather do anything but ask for a loan face-to-face.
The ‘Why’ of Digital Engagement for Credit Unions
Many of us in the movement are concerned that the shift to digital can mean a risk to interpersonal relationships with members. However, in most cases, digital engagement is not only the most preferential for members; it’s the most profitable and efficient for credit unions.
Digital engagement makes it easier for borrowers to get a “yes” faster. That’s important to consumers today. We saw the need for urgency ramp up in a big way during the housing and vehicle shortages of the past few years. Buyers simply could not afford to wait on a slow lender or they’d miss out on their purchase. Borrowers have seen how quickly lenders can move when push comes to shove, and that’s setting a brand-new expectation for speed.
Leveraging the Contact Center for Enhanced Digital Lending Experiences
SoFi, Lending Tree and others have online applications that approve borrowers within minutes. And, they can disperse money in just a few hours, sometimes faster.
To deliver the same or better experience, more credit unions are partnering with outside contact centers providers, like Co-op Contact Center, that understand the credit union way of conducting business with a people-first mindset. Doing so achieves a range of outcomes, including:
- Quicker loan decisioning
- Faster disbursements
- Access to humans who can answer questions, even when engaging digitally
- Cross-sale of backend products like payment protection
- Reduced staffing needs even as volumes increase
All of this ladders up to three really big outcomes for credit unions: operational efficiencies, a rapid and significant expansion of the lending portfolio, and most importantly, a really elegant and modern member experience.
CU Lenders Achieve Efficiency, Growth and Better Member Experience
Operational Efficiencies: Rather than go to the time, expense and stress of putting more staff in more seats, credit unions gain the support of several agents. What’s more, those agents are affordably available during otherwise expensive after-hours and weekend shifts.
It’s common for credit unions without after-hours and weekend support to return to a backlog of applications on Monday. Not only is this an awful experience for lending team employees, but many queued borrowers will have moved on.
Portfolio Expansion: Integrating lending into the contact center enables someone to watch the loan queue after hours. The investment in capturing more in-demand loans is certainly less than staffing afterhours and weekend support.
The demand is real. At Co-op, we are managing more applications in the last few months than we’ve seen historically. Some of this may be due to the waning of pandemic relief funds. We’ve seen the shift from debit to credit on our payments side, and it seems to be echoing in the lending space, as well.
There are financial inclusion aspects to consider here, as well. As demand for loans increases, big banks and traditional lenders tend to get picky, concentrating only on consumers with the best credit scores. That leaves a sizable market opening for credit unions that are accustomed to lending to people, not scores. Imagine being able to say “yes” to someone who has been hearing “no;” and, being able to say it in just minutes over the phone.
Improved Member Experience: Members expect support when they are ready, not when a lender is ready. If a credit union simply isn’t available when the member is making their buying decision, one thing is for sure – the member will still buy; they’ll just use someone else to fund it.
For credit unions, capturing the loan isn’t as much about revenue as it is about being there when their member needs them. The more often a credit union meets a member’s financial needs, the better picture that credit union has of its member. Beyond day-to-day transactions, increased data also helps a credit union better understand member trends and how it may need to evolve for the future.
Best Practices for Modern Credit Union Lenders
Several best practices for successfully meeting members where they are have emerged in post-pandemic times. Just a few of them are below, and each is available to credit union lenders who partner with Co-op Contact Center for lending services:
- Instant Decisioning: Take applications over the phone, after hours, on the weekends and provide a “yes” within minutes.
- Sophisticated Decision Engine: The ability to provide instant decisions comes from a well-designed, people-centric decision engine.
- Simplified Rates and Applications: Loan applications must be easy to complete. And, rate sheets, too should be simple and concise. Those that look like hieroglyphics are a turn off to members and dealers who crave minimalism.
- Limit Stipulations: Members and dealers will no longer jump through hoops to get a loan funded.
- Proactive Communication: When you hit delays or other bumps in an otherwise smooth road, provide members frequent and proactive updates.
- Best Practices for Partnering with a Credit Union-Centric Provider
Similarly, there are best practices for working with a third-party, like Co-op Contact Center, to supplement your lending operation:
Strategy Support: Credit unions should insist their contact center partner offer strategy support as much as operational. Ask questions like, what am I not leveraging? Or, how can I leverage what I am using more efficiently?
Established Point of Contact: Ensuring credit union- and partner-side teams have a single point of contact enhances communication, reduces complexity and speeds results, particularly during onboarding.
Open, Consistent Communication: Credit unions should keep their contact center partner in the loop on what’s coming down the pike from a promotional standpoint. Frequent, in-depth engagement ensures the member experience is consistent across teams and helps the contact center team emulate the experience members would get in the branch.
Flexibility: The customization of the decision engine is where credit unions’ portfolios either survive or thrive. Too conservative, and they aren’t competitive; too risky, and the returns on investment in member experience and integration begin to diminish.
Co-op Solutions Lending Services
It’s easy for credit unions, especially successful lenders with healthy books, to fall into the common trap of “If it ain’t broke, don’t fix it.” They may be funding more loans than ever before, but what is the opportunity cost of operating as is? How many more members could achieve financial freedom with the same staff and a new partner?
There is more revenue out there. There are more borrowers out there. And they need credit unions as much as credit unions need them.
Some of the credit unions we have engaged with recently have been surprised to learn that Co-op Contact Center offers support for lending. The truth is, we’ve been offering both afterhours support and consultative lending strategizing for more than 20 years.
In 2023, our team plans to focus even more energy on introducing more credit unions to what’s within reach for them through a partnership with Co-op Contact Center. Our lending services is a solution available through the same ecosystem mindset that’s driving business on the payments side of Co-op Solutions.
The loan activity we’re seeing is unprecedented, and we’re excited to work with more credit unions to tap into it. To request more information on Co-op Contact Center please contact your Co-op Business Executive, call 800.782.9042, or email solutions@coop.org.
