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Remaining Competitive Through Digital Lending

Credit union lending is expected to continue to grow for at least the remainder of this year, but institutions need a digital-first solution if they hope to compete.

With inflation at the forefront of the current economic outlook, credit union executives and stakeholders are trying to understand what the remainder of 2022 will look like for the industry. While no one has a crystal ball to see the future, it is clear that lending is on the rise; Credit union loan portfolios are expected to return to historic growth rates in 2022, predicted to reach a 9% increase in total loans outstanding, according to CUNA. This increase is higher than the historic average growth rate of 8%, as well as above the 7.5% experienced in 2021.

Per CUNA’s June 2022 Credit Union Trends Report, loan balances grew at the fastest pace on record during the first four months of 2022. In addition, credit card lending is increasing at a rate not seen for the past 15 years, while new auto loan balances are rising at the highest velocity since January 2017.

All of these trends are positive for credit unions as lending is an important aspect of their overall profit loss (PL) and one that should not be overlooked as credit unions make their plans for the remainder of 2022 and beyond. In fact, lending has played a large role in the success credit unions have seen throughout many unexpected economic events, from inflation to the COVID-19 pandemic, among others.

In today’s digital-first world, it is especially critical for credit unions to not only factor lending into their strategic plans, but to also consider competitive digital lending when determining what offerings and services to provide members. Now, members are becoming increasingly accustomed to immediacy, with digital experiences at the forefront of many credit union offerings and services. This especially rings true surrounding the current process and time required for account opening and lending approval. Gone are the days when members are willing to wait until a branch is open during a weekday to take out a car loan, for example. Instead, they want the ability to request a loan while at the dealership looking at cars on a Saturday.

While this might seem daunting, there are numerous tools already available to help credit unions bridge this gap and meet members how and in the channel(s) they prefer. For some credit unions, partnering with a third-party provider like a credit union service organization (CUSO) or fintech might be the best approach to digital lending.

For example, to help its owner credit unions solve this challenge, PSCU the nation’s premier payments CUSO has partnered with Amount, a fintech focused on developing next-generation account opening, lending and buy now/pay later (BNPL) solutions for Tier 1 financial institutions. The partnership will provide PSCU owner credit unions with credit card origination services through a platform that delivers the digital experience many members are already seeking.

By using pre-filled forms and automated identity verification through our Amount partnership, consumers can quickly and easily apply for credit cards from anywhere and be approved instantly. Additionally, consumers who are not yet members can apply for credit union membership as a part of this streamlined process. Once approved through digital verification procedures, a credit card number is immediately generated and can be used to provision a digital wallet, enabling members to start making purchases right away. A physical card will also be mailed soon after. For credit unions, introducing a seamless, fully integrated digital account-opening solution like this can allow them to gain market share and compete in today’s modern, digital-first landscape.

With a positive lending outlook, now is the time for credit unions to lean into the lending space while simultaneously prioritizing a digital lending approach to ensure they deliver a competitive experience to their members.

Denise Stevens is responsible for product management, new product development, digital experience and innovation at PSCU. Before returning to PSCU in 2015, Denise spent two years deepening her field knowledge of credit unions as Executive Vice President at PSCU Member-Owner Vantage Credit Union in St. Louis. Prior to her tenure at the credit union, she spent seven years at PSCU, where she ultimately operated as the Vice President of Innovation New Product Development. Denise’s career also includes roles as Business Leader at Mastercard, Paymentech and Equifax.

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
August 1, 2022

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