Over the past few years, credit unions have continued to earn their spot as a powerful lender. There are currently more than 5,600 federally insured credit unions with over 110 million members in the United States. With auto loans comprising more than one-third of lending, it’s safe to say consumers are flocking to credit unions for their auto, home, and personal lending needs.
This puts credit unions in a powerful position.
Aside from lower interest rates and more flexible terms, credit unions have also earned their reputation as being trustworthy and member-focused, something that consumers hold in high regard.
With all these great factors drawing in borrowers, it’s important that credit unions are equipped with the tools to uphold consumer expectations and effectively serve their members. A positive member experience is key to maintaining great relationships and retaining lifelong members.
Technology And The Borrower
Can I apply online? Can I make monthly payments? Is there an app? These are the type questions many consumers, especially millennials, ask themselves when they’re looking for a financial partner.
While some of the lending process still requires face-to-face interaction, the availability of digital channels is mandatory if credit unions wish to stay relevant and competitive.
In a recent study by PricewaterhouseCoopers (PwC), it was discovered that in the case of auto financing, one of the biggest decision factors (aside from interest rates) was how quickly the application and approval process was from start to finish. This is the why car dealership financing continues to do so well. Despite having higher interest rates, they are quick to give borrowers multiple loan options on the spot.
The lending experience of your customer from application to approval to payments should be a smooth and simple process. Implementing online and digital practices to streamline the stages your borrowers go through will ensure your credit union is meeting your borrowers’ lending needs.
Technology And The Lender
In order to serve borrowers at a higher level, credit unions should be equipped with tools that also streamline their backend processes. By improving their internal practices, credit unions give themselves the platform needed to provide better service and remain competitive in an evolving and competitive industry.
In a recent Federal Reserve study, 45% of respondents said traditional loan applications took too long, while only 17% complained of long wait times from online loan applications. The speed of application processes is a feature that borrowers consider in their decision making.
For example, if Credit Union B has the ability to process 50 loan applications a day and Credit Union A can only process 35 applications a day, the competitive advantage is damaging. If a borrower needs an auto or personal loan as soon as possible, then they are going to want immediate feedback from their potential lender.
Any time an institution finds itself falling short in meeting online and digital demands it’s losing out on possible borrowers.
Whether it’s seamless online applications, multiple payment channels, or other user-friendly experiences, a credit union that positions itself to keep pace with consumer expectations will keep borrowers satisfied.
The big banks and other large financial institutions have always been in the position to be first in launching new technology or online conveniences to their borrowers, which is something that has always been a competitive advantage. Mobile-optimized direct auto lending platforms capturing auto refinance and new money purchases through ecosystems and lead aggregators offers attractive capture rates that credit unions should have access to.
There are now many innovative lending solutions available to credit unions that are geared toward improving the capabilities of both borrowers and lenders. To learn more about auto lending trends and ways to improve lending at your credit union, download our eBook, 2018 State of Auto Lending.
Jeff Schneider is an Account Vice President for SWBC.