Three Opportunities for Credit Unions in Today’s Evolving Digital Lending Landscape

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Brian Hamilton Photo
Origence Lending Services

4 minutes

Prioritize digital transformation now to set up your institution for long-term growth. 

Sponsored by Origence

From high interest rates to liquidity challenges, the financial services sector is facing its fair share of industry headwinds this year—and credit unions are no exception. 

The good news? Despite an economic downturn, credit unions remain an attractive option to potential borrowers due to their competitive loan rates. But now, an unsteady economy is placing pressure on institutions to boost efficiencies and provide a first-rate member experience so they can remain competitive while navigating industry headwinds.

Despite these challenges, credit unions have a unique opportunity to act now and gain a competitive edge. Thanks to credit union service organizations, credit unions of all sizes can pursue digital transformation in alignment with resource availability and scale. By investing in the right process and technology improvements now, credit union leaders can navigate the next business cycle with greater efficiency and standout digital capabilities.

Digital Transformation Brings New Opportunities

Digital transformation remains a top priority for many institutions as economic challenges persist and consumer expectations for digital experiences continue to evolve. Although credit unions have historically (and understandably) trailed behind large banks in terms of digital capabilities, there’s now an opportunity for credit unions to leverage modern lending solutions ahead of the next business cycle.

Specifically, there are three opportunities you need to prepare for in today’s evolving digital landscape:

1. Take a multi-tiered approach to digital transformation to replace legacy systems. When it comes to digital transformation, one of the biggest challenges credit unions face is the inability to integrate new solutions with legacy systems. For example, it’s difficult to balance significant changes like overhauling a legacy loan origination system with smaller shifts that improve the member experience.

Rather than falling victim to analysis paralysis, think of every undertaking as a rock. The big rocks represent the core elements of your transformation, like deploying a loan origination system or a new card platform. Your small rocks include incremental shifts that help optimize the member experience, like providing online chat support or enabling biometric authentication. Though it’s not necessarily advisable to push forward more than one big rock at a time, you can likely balance a big rock with several smaller rocks. This multi-tiered approach allows you to deliver quick wins that improve members’ experiences while addressing legacy systems that could hinder the success of large-scale digital transformation efforts.

2. Provide user-focused experiences to secure new members. The proliferation of smartphones and applications optimized for simple and seamless user experiences is disrupting the notion that consumers need a primary financial institution. So, as many consumers are no longer concerned about having their savings, checking and lending needs met by a single institution, you have a greater opportunity to win over new members. 

While your overarching systems impact delivery capabilities, it makes sense to approach each of your product offerings as a separate initiative. For example, how can you provide the most seamless auto loan experience to your members? Once you solve this challenge, move on to the next offering: How can you streamline and enhance collections? Approach each undertaking with an agile framework and user-centered design thinking. 

3. Bring stakeholders on board to boost operational efficiencies. A technology investment can drive positive change and efficiency, but only if everyone is committed to changing the way they work. That means you need to involve stakeholders with different perspectives early in the process to ensure they understand the value and importance of investing in digital maturation. You also need to engage line-of-business employees to capture strategic feedback and align your efforts with team members’ needs and concerns. 

Also, do not confuse collaboration with consensus. Use a framework such as the RACI model (responsible, accountable, consulted, and informed) to help keep things moving. With buy-in secured, stakeholders at all levels will be on the same page when it’s time for deployment. This approach sets the stage for a successful transition and empowers employees to work collaboratively with the technology. As a result, you can automate and expedite tedious processes to approve more loans and allow staff to focus on more strategic initiatives.

Prioritize Digital Transformation Now to Set Up Your Lending Institution for Long-Term Growth 

With employee buy-in and member loyalty on your side, a focus on digital transformation can take your member experience to the next level, enabling you to keep pace with even the most digitally equipped financial institutions. 

Most importantly, don’t postpone investments and play catch up. Industry challenges aren’t going away, and member expectations for digital and mobile capabilities will only continue to grow. But focusing on process and technology improvements can provide a competitive edge that enables you to compete. And the sooner you start, the easier it will be to stay ahead of the curve.

Brian Hamilton is a 28-year financial services veteran working with credit unions, banks, finance companies and fintech providers. He has managed all facets of consumer lending operations and led key initiatives in developing groundbreaking online applications, custom scorecards and loan origination systems. Hamilton joined CUES Supplier member Origence in 2017 as VP/innovation and insights, leading research efforts on emerging trends and product innovation. In 2020 he accepted the role of president for Origence Lending Services, the business process outsourcing subsidiary of Origence. Before joining Origence, Hamilton was VP/lending at several of the largest credit unions in the United States, SVP at California Community Bancshares, and chief credit officer at BlueYield. He holds a bachelor’s degree in management and an MBA in digital innovation and information systems from Pepperdine University.

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