5 Ways to ‘Get Personal’ With Members

Personal loans are on the rise. This may sound surprising, even as interest rates have jumped to as high as 7.8% for 30-year fixed-rate mortgages. Yet, borrowing continues to appeal to consumers: More than 22 million Americans have at least one personal loan – an 8.1% increase from the previous year, according to LendingTree. We can only assume this number will continue to rise as consumers look to consolidate debt, remodel their home, or cover sudden expenses through loans with more competitive interest rates than credit cards or credit card cash advances.

In their quest for the most attractive rate, consumers also are seeking lenders that provide personalized and more convenient experiences. With so many loan options available, it’s important that credit unions keep their eye on the latest digital trends, so they can optimize their lending process and close the borrower first.

Here are five strategies credit union leaders can implement to stand out in a crowded marketplace and keep pace with the needs and desires of digital-savvy members.

1. Hyper Personalized Experiences

Personalization sets brands apart from competitors, even when it comes to banking. A JP Morgan survey found 41% of respondents said they wished banks provided more personalized offers or information to help them achieve their financial goals.

When it comes to the loan application process, credit union lenders have access to valuable data that they can take advantage of to successfully offer the right product at the right time, even if an applicant doesn’t complete their application. Using this data as context to provide hyper-personalized offers will lead to ongoing member wallet share and loyalty, and increased revenue.

2. AI-Powered Lending

Artificial intelligence is revolutionizing the loan approval process as algorithms and machine learning help credit unions look beyond traditional pass and fail guidelines. By leveraging AI-powered lending solutions, credit unions can target the right consumers, provide holistic lending decisions quicker and improve the member ­experience. AI potentially provides countless opportunities for improving member acquisition and revenue gains if used the right way.

3. Lending On the Cloud

Transitioning to the cloud is gaining momentum in the banking industry as it enables lenders to deliver new services and products to the market quicker while giving them more freedom to innovate and do business with scalability, flexibility and security. Not only does migration to the cloud reduce IT costs, it’s also a way to compete with digital-first competitors and generate revenue from digital-first members. Cloud lending tools can be used to automate the loan origination process, safely manage documents, and minimize the risk of fraud and theft.

4. Automation of the Loan Lifecycle

When shopping for a loan, efficiency is on the top of every applicant’s mind. How long will it take to complete an application and receive a decision? The applicant is focused on the need for the funds and is a Google search away from finding numerous other financial institutions with which to apply. Consumers, especially those of the tech-savvy generations, are certainly not willing to wait for days for an approval.

Automating the entire loan lifecycle will not only decrease the manual labor for the lender but improve the lending experience for the borrower. Something as simple as using a Customer Relationship Management system or system of record to prefill known data, or enabling social media shortcuts such as entering LinkedIn credentials to prefill an applicant’s work history, can be a huge value add.

5. ESG Awareness

Digitally savvy consumers want their lending partners to be ESG (Environmental, Social and Governance) friendly. There is a growing concern for the environment – especially among younger members – and these and other ethical issues are becoming a deciding factor for many consumers when choosing their lending provider.

They are ready to reward or penalize organizations based on their efforts or lack thereof to help make the world more sustainable. In the realm of lending, investing in ESG-friendly technology, being transparent about efforts toward issues like carbon emission and offering sustainability-linked loans can give one lender a competitive advantage over another.

Basic personalization will no longer suffice in credit unions’ efforts to attract and retain members who are pushing the boundaries with digital adoption. Consumers expect their lender to deliver tailored offers and hyper-personalized experiences with simplicity and convenience. Failure to do so will only lead to low conversion rates and unimpressed members.

Kris Frantzen Vice President of Product Strategy Temenos Malvern, Pa.