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Digital engagement and the impact on the lending experience

By: By Keith Riddle, EVP, Enterprise Solutions Development

The Fintech revolution keeps changing what the phrase “instant gratification” really means for both you and your members. Almost gone are the old days of cumbersome, time-consuming paper processes for managing your financial accounts. As financial institutions continue to leverage technology to offer consumers a better user experience, one of the exciting results is the growth of specific services, such as lending.

Join us for the next live webinar in our new mobile-digital growth series: Impact of Digital on Lending

With so many digital financial services available from Fintech providers these days, more and more consumers seek streamlined application experiences and approvals as soon as they are ready to borrow. In this live webinar, we will discuss how giving your members a seamless digital experience improves revenue and reduces abandonment.

May 16, 2017 at 3:00 p.m. ET

For example, according to a recent article by the Credit Union Times earlier this year, there is a strong correlation between lending growth and mobile-banking usage. Because the 24/7 convenience of mobile banking allows customers to access every kind of balance they have (i.e. checking, savings, loans) anytime, anywhere, customers “may also have access to other crucial pieces of information, such as principal balance and next payment due date. All of this serves to increase lending growth, as consumers are constantly looking for efficient ways to manage their financial lives.”

The Credit Union Times article also reports that in a study from Salesforce, “2016 Special Report: What Millennials Expect from Their Banks,” more than 27% of millennials (or one quarter of them) are completely reliant on a mobile-banking app. “Millennials are well versed in its features and comfortable filling out online lending applications from their phones.” Basically, if you want to grow lending, this is the demographic to target both now and in the future.

Digital consumer lending experiences from Wall Street

Even preeminent Wall Street firm Goldman Sachs is harnessing Fintech to increase lending growth and positively impact the consumer-lending experience. Founded nearly 150 years ago, Goldman Sachs obtained a bank charter in 2008 during the financial crisis and recently entered the consumer lending business with the introduction of Marcus by Goldman Sachs.

  • A shifting focus on digital engagement from cost reduction for the financial institution to enhancing the member’s overall experience. For example, as digital applications evolve, the consumer’s workflow is more streamlined as the back-end data gathering services speed up the assembly of member info.
  • Allowing the consumer/member to engage with their financial institutions on the channels they prefer at the times they want. 24/7 account access is a clearly powerful tool for improving member engagement and increasing the use of services/products, as discussed above.
  • Transitioning consulting and sales activities from being reactive to proactive. For example, a credit union can leverage data they may have on file for a given member and create a persona to capture the member’s unique financial attributes. The credit union can then proactively position/solicit the member for services specifically related to their attributes.
  • Becoming more engaged throughout the member’s journey, from shopping for products to opening accounts to the onboarding process and expanding the relationship. For example, most mobile banking apps can send push notifications and alerts to your members to remind them to check their balances.

Capitalizing on opportunities to deliver an engaging, digital-lending experience

So what does this mean for your credit union? Digital lending will be yet another aspect of the suite of mobile experiences expected from new and existing members, especially those who fall within the category of mobile-first usage patterns. Credit unions must assemble a plan to evaluate the functionality of digital lending applications, supporting a variety of loan types, as part of their digital services strategy.

If your credit union is offering first mortgages, the ability to offer a streamlined, digital user experience to compete with the Rocket Mortgage (an online loan application platform) phenomenon will be crucial to long-term success. Since credit unions only hold 6% of share in mortgage loan applications, the opportunity to develop an appropriate digital engagement plan for mortgages would yield significant revenue opportunity.

Corporate One remains committed to monitoring the impact of digital lending trends, and we encourage you to watch for future announcements about our expansion of digital offerings.