Offering new consumer-oriented lending tools to digitally savvy customers doesn’t have to break budgets.
Credit unions have a long-standing reputation for being customer-centric, but they’re stuck in the middle when it comes to delivering the digital innovations that today’s banking customers demand over their larger and smaller competitors. Major commercial banks typically have a larger budget to build or host consumer-facing financial tools, and FinTechs may have an agility advantage in this highly competitive space, especially smaller ones.
However, with millennials increasingly representing a larger share of open loan holders, credit unions have a unique opportunity to use their 86% satisfaction rate to engage this digital first generation by offering tools most streamlined at the lowest rates credit unions can typically offer. .
Some are missing out on this opportunity, as additional studies of PYMNTS have found a lag in personal loan innovations, even among credit unions that are considered “first movers.”
This oversight by some credit unions could drastically limit their attempts to appeal to millennials, who overwhelmingly cite convenience and ease of use as top drivers when choosing financial institutions. Possibly lower in cost to adopt and implement than other customer loyalty offerings, tools to simplify mortgage and other loan applications may be uniquely poised to attract long-term (or even lifetime) customers in this demographic.
These solutions are already beginning to emerge in space. A competitor to business credit unions, PNC, has been digitizing loan applications as a customer loyalty and retention strategy. In September, it announced a partnership with cloud banking software firm Blend, to digitize its mortgage process. The association’s goal is to streamline the process for both applicants and employees, with clients being able to submit a mortgage application as well as import payroll and other financial information on a single platform.
Another consumer loan giant, JG Wentworth, is also investing in innovative loan offerings. Last month, it purchased the FinTech Stilt personal loan to incorporate the Stilt platform into its online capabilities. The acquisition will allow JG Wentworth consumers to choose between a fully digital and fully automated loan origination model, as well as one assisted by the company’s call center.
Credit unions can combine their historic customer-first mission while drawing inspiration from the digital-first strategies implemented by larger competitors like PNC and JG Wentworth. However, while following the lead of larger financial institutions in offering more simplified lending tools, some credit unions, especially those with more limited resources, may want to consider looking to an outside partner that already offers tools that can optimize lending. loan processes. By combining their customer service skills with lending tools to serve digitally savvy customer needs, credit unions can engage customers at the all-important beginning of their personal lending process.
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