Redefining the Consumer Lending Environment

Successful credit unions consistently embrace new economic trends that noticeably transform the industry. Today, members across all generations prefer quick and low-friction transactions along with the opportunity to succeed in the credit approval process, which requires credit unions to see members as more than a traditional credit score.

Retaining and attracting new members in today’s consumer lending environment relies on incorporating digital solutions into credit unions’ processes, offering lower friction transactions and embracing the evolution of employment.

Importance of Cloud Data to Credit Unions

Credit unions diligently work to eliminate the tedious process of pulling data from multiple sources to prove a member’s reliability when borrowing. One way credit unions are doing this is by utilizing cloud-based digital verification solutions.

Using cloud-based technology can help credit unions create a unified lending landscape that provides for greater transparency for, and more seamless transactions with, each of their members. Accessing member data from a cloud-based environment can also enhance data security and provide quick, digital access to members’ historic records. The result can be reduced risk and default rates for the credit union, due to its ability to review comprehensive records relating to the member, and improved processing speeds for the individual.

Shifting from excessive paper-based processes to digital cloud-based solutions can allow credit unions to expedite the loan approval journey, gain clearer insight into members’ history, and adapt to ever-changing member needs and market trends. Cloud solutions also provide operations scalability to better meet member demands with minimal disruption to business by allowing credit unions to focus their resources on member engagement and initiatives that increase success rather than paper-intensive review processes.

Faster Transactions: Easier With Reduced Friction

Reliance on bank statements and consumer permissioned accounts are fast becoming outdated verification methods. Members demand a fast, lower friction process that removes responsibility from them, streamlines the credit union’s processes and uses up-to-date data to meet their expectations.

Understanding the importance of automation in the credit union experience for all types of borrowers can lead to overall improved member experiences. Leveraging the combination of digital and human interaction reduces the need to utilize timely, outdated paper-based processes. According to PwC, 17% of customers will walk away from business transactions after one bad experience. Driving revenue depends on creating as simple a process as possible for both parties, increasing product engagement and providing efficient experiences.

Considering individual conditions and tailoring experiences to accommodate new and old customers can be challenging. But, credit unions that seek to be financially inclusive can attract diverse groups of borrowers across all generations by providing exceptional personal journeys, regardless of their credit file.

The Gig Economy Is Here to Stay

The pandemic is also forcing everyone to consider the various ways new generations can earn a sustainable income, making credit unions reevaluate the importance of traditional credit scores for creditworthiness. Full-time employees sitting in an office for eight hours a day is an outdated picture of the workforce. Since the pandemic started, resignation rates are up more than 20% among people in the 30 to 45 age group, according to Harvard Business Review, while all generations have embraced working remotely and having free time to pursue additional projects.

The growing revolution in employment is altogether redefining what it means to maintain an occupation. With applicants diverting away from multi-year histories of job stability, credit unions must expand their scope to identify low-risk borrowers. These changes are not affecting consumers’ ability to earn income or pay their personal bills on time, and such members should not be denied financing due to traditional measures of creditworthiness. Utilizing instant cloud-based digital verifications of income and employment is one way that credit unions may gain a more holistic view to better evaluate an applicant’s ability to repay a loan. Consumers can now embrace being a sole proprietor or freelancer without triggering a red flag for credit unions, finally escaping the traditional role of full-time or part-time employees.

Leveraging technologies can help credit unions remain up-to-date with evolving member preferences and trends. The credit unions that make it a priority to attract a diverse group of members across all generations, regardless of their credit file, and provide exceptional personal experiences, will meet the needs of today’s consumers.

Alison Heller is the Sales Director – Consumer Finance, Verification Services at the St. Louis, Mo.-based Equifax Workforce Solutions.