Lending Trends in 2021 & Beyond

 

The benefits of digital lending are undeniable, and as more lending services enter your members’ market, it’s crucial to be aware of the latest trends in lending. Lending programs are being offered by more than just banks and credit unions – retail giants like Amazon are continuing to expand their financial services, aiming to create all-inclusive experiences for their current and potential customers.

Let’s discuss some of the latest lending trends in 2021 and beyond.

Lending-as-a-Service

With the emergence of fintech as a means to offer cheaper and faster online options for all banking needs, creating space in the industry for Lending-as-a-Service.

Lending-as-a-Service allows companies and brands to offer transparent, user-friendly financing solutions, rather than partnering with a financial brand to do it on behalf of the brand. This has recently made waves in the online automotive retail sector.

By using APIs to tie online applications to one another, your credit union’s lending services will need to continue integrating and streamlining lending services to capture more tech-savvy members of all ages who have embraced new digital solutions as a result of the COVID-19 pandemic.

Changes in Lending Trends Due to Member Behavior

As younger generations begin taking up more market share in the lending industry, your member needs also change. For Millennials and Gen Z, generations who spent much of their childhood and adolescence in the shadow of the 2008-2009 financial crisis, avoiding debt is a top priority. And many of these people are willing to take out loans to consolidate and pay down their current debt. This means they are more debit card-forward than your credit union’s older members.

This change in member behavior comes with higher demand for offerings that provide lending opportunities with fewer features attached that also mitigate the incursion of additional debt.

Increased Solutions for Bridging Business Capital Gaps

According to FintechTris, another big shift in the lending world includes attempting to bridge the gap in business credit offerings: “Working capital loans, equipment financing, and lines of credit are now readily available for this user segment through non-bank alternatives.”

There’s also an increase in companies looking for partners willing to invest in unsecured offers. Companies are entering the lending industry by allowing borrowers to use refundable security deposits as collateral for loans, which then allows them to receive their deposit back after 6-12 months of on-time payments.

Fighting Fintechs for Market Share

Credit unions are faced with growing competition from fintechs, and the solution will have to be focused on transparency, flexibility, and peace of mind, according to CUNA.

The key to success in this changing lending climate is to leverage your credit union’s reputation and commitment to providing high-quality member experiences by creating great lending opportunities and offering sound financial advice as we move into 2022.

The Future of Your CU – Your Way

IMS knows CU-specific tech solutions the way that your credit union knows exactly what your members need – from financial advice to insight on lending trends. Let us help with your virtual desktop and private cloud needs.

Contact IMS to set up your consultation or call 888-356-6043 today to explore our solutions and services.


4 Ways to Leverage Credit Union Data

 

Credit union data is one of the best tools you have to serve your members. And data analytics are opening lots of doors for reaching select audiences and maximizing your business and marketing efforts. But like any tool, you have to know how to use it effectively. Here are four great ways to leverage credit union data.

Evaluate Your Segments

According to the Financial Brand, there are two main segmentation categories to prioritize: transactional data and behavioral data.

Transactional data, the largest for credit unions, includes everything from loan balances to account activity and can be captured through multiple channels like mobile apps, digital applications, and even in-person transactions. When assessing this data segment, it’s important to keep in mind the differences between your audiences – their preferences in transaction mediums (digital and otherwise), the breakdown of products and services being used by specific age groups, and more. If your transactional data segments aren’t producing the desired results, it might be time to re-evaluate, especially in light of the massive shift to online services since the coronavirus pandemic.

The other main segment to prioritize is behavioral data, which includes everything your members do that isn’t tied to a transaction – this includes things like spending habits, member experience touchpoints, things they need and want, and more. This data is typically captured on a customer relationship management (CRM) platform. Just like with transactional data, take a look at your current practices to see if you can better leverage your credit union data.

Understand Your Data Systems

More than just looking at the data you are collecting, you also need to understand how your data is being collected and stored. A core system is a hub for your credit union data.

As mentioned above, your digital and CRM data, which are stored in your core system, are great assets. CRM data can give you insight into current member experience trends. You can use those trends to enhance and streamline your services to accommodate them.

Digital banking data across banking institutions have been showing a huge trend upward in the use of mobile banking services. This means a large amount of your data is now digital, and it should be standard practice to analyze this data on a regular basis so you can implement new and more efficient ways to service your members.

Analyze In-Person vs. Online Behaviors

Banks, and credit unions especially, still attract a lot of in-person business. In fact, it is one of the hallmarks of successful credit unions. Using your transactional and digital data, you cannot only optimize your members’ experience, but you can also use the insights to train and inform your staff so they can transform that data into more personable, targeted experiences for your valued members.

Enhance and Assess Cross-Selling Methods

Improving cross-selling processes is a great way to better engage your current customers, a crucial process in your credit union’s business.

We found this 4-step process for improving cross-selling:

  1. Define cross-selling and measure its effectiveness: Sell more products and services to existing customers by defining the goals and areas you want to target and improve.
  2. Establish clear metrics for measuring performance: Your employees will be the primary point of access for cross-selling. Leaders or managers must clearly define the goals and performance expected.
  3. Make marketing and cross-selling communications better and clearer: Customers are savvier than ever, and your credit union’s response to this should be to increase transparency when it comes to cross-selling. You want to offer personalized campaigns and protocols to increase engagement and selling.
  4. Reward employees who perform well: Your staff wants to serve your members, and if they do an exceptional job, you should reward that. Offering cross-selling incentives for your employees can also boost the effectiveness of cross-selling programs.

Leverage IMS’s Continuous Data Protection

Get rid of complex legacy backup systems and integrate multi-system solutions, such as data orchestration and catalog management, into a single software platform. With continuous data protection from IMS, your credit union can minimize downtime, scale-up architecture and save costs.

Contact us for more information.


Lessons for Future Credit Union Leaders

 

New leaders learn from experience, education, and the leaders who came before them. And as credit unions grow and change to keep up with the demands of members all over the country, we thought we would take a break from focusing on the future to look back on the lessons that credit union leaders have learned.

Experience + Tech = Success

In a piece titled “Shaping the Future of Our Movement,” Jim Nussle (president and CEO of Credit Union National Association) shared some of the leadership insights he’s gathered over his many years working in the credit union industry.

Credit unions are often seen as “old-school” in the way they do business. But it’s that tried and true, exceptional member experience that sets credit unions above big bans, especially for younger members.

Speaking on this, Nussle said, “I’m far from cutting edge when it comes to technology, but our next generation of leaders was born into a mobile-enabled world, coming of age as the smartphone transformed our lives. It’s that digital-savvy which will lead our businesses and our movement into the future.”

Diversity and the Pursuit of Financial Wellbeing for All

Nussle also talked about the need for future credit union leaders to set their sights on achieving “financial wellbeing for all.”

Creating more options for financial wellbeing – including resources, products and services, and other highly inclusive solutions will not only grow your member base, but will also positively impact your members’ futures and your community as a whole.

Nussle encourages future credit union leaders to ask themselves, “How will I take a leadership role in helping the credit union movement promote financial wellbeing for all?” as a starting point for fostering innovative and diverse credit union solutions for members.

Insights from ‘Ask the Old Guy’

CUNA has recently started a blog series called “Ask the Old Guy” and we are loving it. This series is written in a style reminiscent of newspaper advice columns. The first featured expert is James Collins, president and CEO of O Bee Credit Union.

Much of the advice offered is more a primer for current and future credit union leaders to help them think critically about some of the issues and processes that lie ahead. Many of the answers also have a touch of humor, but the general best practices outlined in the article include fresh takes on coworker and member relationship building or problem-solving.

Our favorite nugget of wisdom from “Ask the Old Guy”? Here it is:

“Leadership is the ability to convince others to wholeheartedly follow you on the path to a common goal. It is not an ability that is bestowed, learned, or practiced. Rather, it requires you to have the trust of those around you.”

20 Years & 20 Lessons

CUInsight featured an article by Jayni Sech, who is celebrating 20 years as a business professional and she shared 20 lessons she’s learned along the way, from professional tips to life lessons.

Though all 20 of her insights were great, it was this thought that spoke volumes: “As I look back on the last 20 years, one of the biggest lessons I learned was to learn the lesson.”

Keep learning, keep growing, and keep leading. The journey will be a great one.

CU Leaders Need Great Digital Solutions

Being a leader means helping shape your credit union so that it will continue to thrive for years into the future. IMS has a range of services – like cloud backups, core hosting, IaaS, and disaster recovery – to help you make the most of your credit union, today and always.

Contact us for more information.


How Can Credit Unions Prepare for Regulatory Changes?

 

The effects of the COVID-19 pandemic have not only changed daily life but also many industry futures. As credit unions take stock in the amazing transformations that took place in 2020, many regulatory bodies are taking a hard look at their best practices through the lens of a global crisis.

Let’s discuss how credit unions can prepare for regulatory changes.

Preparing for Regulatory Changes

Recently, Credit Union Business News featured an article by Joel Schwartz, Founder & Co-Chief Executive Officer of DoubleCheck Solutions. This article highlights the ways credit unions will be facing regulatory changes as the world moves out of the pandemic.

Many expect consumer protection and financial transparency regulations to take center stage.

Consumer Protection & Empowerment

The Consumer Financial Protection Bureau is waiting on a Congressional vote to institute Rohit Chopra as Director, and if that happens, consumer protection and empowerment regulations are likely to be more heavily enforced. But what does that mean?

It means more guidelines will be put forth to promote more financial transparency for consumers, thus empowering them to make better-informed decisions regarding their banking and other financial activities.

This enforcement comes on the heels of heavy amounts of class-action lawsuits being filed against credit unions. Many of these lawsuits stem from “deceptive practices in assessing non-sufficient fund (NSF) fees.

Minimizing Operations Impact

This push for financial transparency is spearheaded by a goal of providing straightforward financial services without drastically impacting credit union operations.

This push will most heavily impact language and operations surrounding things like overdraft programs, to cut out excessive fees and vague language. This change, however, could easily wipe out a credit union’s main source of non-interest income: NSF fees.

These changes would affect your core system and its operations related to checking account structure. Alerts, notifications, and fee assignments would all have to be modified to reflect more transparent and specific situations and guidelines.

Your credit union would also have to put time and labor hours into alerting your customer base about these changes – what they are, who and what they apply to, and when they take effect.

This also means employees will spend more time auditing and ensuring compliance with the new, stricter regulations.

This would also have a financial impact. Members will love paying fewer overdraft fees, but bounce fees and late payments could be steeper, which negatively affects your credit union’s bottom line.

The Good News

Credit unions can get ahead of the curve by implementing better technology that can handle these regulatory changes now. Partner with a fintech or software provider that can customize your operations surrounding NSF fees before the government starts mandating it. This will help you work out operations kinks and train your staff on the new system before you are expected to have these protocols in place. It also gives your credit union reputation a boost, positioning it as member-centric and forward-focused.

Be sure to look for a fintech or software provider that already has a solid foundation in the banking industry. Or partner with a company that has solutions tailored to credit unions specifically, like IMS.

Get Your Revamped CU Solutions from IMS

IMS can help with the tech upgrades that will make your next regulation-based transitions easier on your credit union team and your members.

IMS has virtual private cloud services and solutions like core hosting, virtual desktop, disaster recovery, and more for your credit union. Contact us today for more information.


The Benefits of Embracing Digital Lending

 

Digital banking trends are continuing to gain momentum as pandemic measures remain and customer preferences shift. And as these trends grow, they also expand to include more products and services. Enter digital lending.

Digital lending is the migration of most or all of the lending and loan origination process to online and mobile platforms. Gone are the days when customers went from bank to bank, trying to convince one to give them a loan. Customers are savvier – they want to compare financial institutions’ rates and policies online to find what they believe is the best deal. And right now, auto loans are seeing a big increase – mostly due to online loan process availability.

Digitizing the loan process allows your credit union to offer a straightforward, user-friendly process for applying for and receiving loans. Here are some of the benefits of embracing digital lending.

Enhanced Member Experience

When it comes to big decisions, consumers take their search to Google first. They want to see if your credit union has what they need before they ever call or step foot in one of your branch offices.

Often, when a potential customer can’t find what they need on your website, they move on to the next business in their search results, and you’ve lost that customer before you even knew they were there. Creating and integrating digital lending into your credit union’s repertoire allows you to meet customers where they are and give them a valuable online resource.

Many banking customers want to keep their business local to the community. While big banks have always had the advantage when it comes to implementing new technology, credit unions offer a more personalized, local service that people are craving. And opening new digital avenues for business can also improve your credit union’s positioning in your local and regional markets.

Improved Efficiency

By embracing digital lending, you can also improve the efficiency of your process, which in turn creates quicker turnaround times and more business for your credit union.

Allowing your customers to serve themselves relieves some of the burden from your employees and creates more time and availability for them to perform other duties.

Increased Analytics

Digital lending also improves many back-end experiences. The software used to create these online loan opportunities can also often create insightful reports and offer helpful analytics.

These resources can assist in your strategic and marketing efforts as well. You will have the ability to tailor your efforts to make a bigger impact on your members and your community.

Digital Lending Is a Staple of the Future of Banking

Self-service and online banking came to the forefront of customer service in 2020. What began as a necessary shift to accommodate social distancing and mitigate the spread of germs only accelerated the timeline for banks and especially credit unions to catapult their offerings into the digital realm.

To stay relevant and competitive, it’s important for your credit union to continue to focus on forward-thinking, online and mobile-based solutions so you can continue to grow your business and better serve your members. The transformation of banking was kick-started by a pandemic, but the momentum won’t be wasted by any enterprising business that wants to be a part of that future.

Digital Solutions for the Future of Banking

We know how important it is to safeguard your member data, especially as you continue to offer more online products and services. Having cloud-based backups housed offsite is a great way to ensure the integrity of your files and give you and your staff peace of mind.

IMS has virtual private cloud services and solutions like core hosting, virtual desktop, disaster recovery, and more for your credit union. Contact us today for more information.