2020 CU Lending Trends
In the past, credit unions could get by with a single compliance officer. However, 2020 has brought unprecedented uncertainty in the financial sector and with that a tidal wave of new regulations. Today, even larger established credit unions are struggling to keep up with compliance.
The future of credit union lending trends has been greatly affected by the global pandemic, economic volatility, and social unrest. Instead of reacting to regulatory changes, CUs must be proactive to stay competitive. Working toward a spotless compliance record can help prevent any financial uncertainty for your branch. By following current lending trends, recognizing the basics of compliance, and outsourcing, your CU can minimize risks and increase gains.
1. Streamlining technology to improve the customer experience
Data from a Raddon Performance Analytics program in 2019 shows that for the average credit union, only one-third of its membership is profitable. Arguably, the most important lending trend in 2020 is perfecting the customer experience. Both members and businesses expect a seamless interaction from their financial institution. To implement this strategy, CUs will need to personalize the customer experience by investing in technologies that are streamlined for both CU members and CU employees. Members can view account balances, products, services, and application forms in an easy-to-navigate website and mobile app. When the member is on the go, or it’s 2:00 a.m., credit unions are there to provide instant help. Using member data, credit unions can maximize profitability by communicating with the member in their time of need. According to data from McKinsey & Company, credit union engagement involves 65% of members interacting through more than one digital channel. By providing your members with multiple social media channels to engage with, you can improve customer support efficiency and gain virtual foot traffic from younger members who boast about their positive credit union experience online.
2. Emphasis on training
Employees should have access to data that can aid in suggesting additional services and products to members as well as minimize weaknesses in the chain of operations. Executives should have access to the big picture, lenders can view analytics, and regulators are provided with compliance information. In addition, the credit union industry offers many conference opportunities where your credit union staff can attend and stay on top of new trends. As lending continues to be a viable opportunity for credit unions, it’s important to consistently refine products and processes to stay competitive. Remaining relevant is not only vital for current membership, but also the attaining and retention of future generations.
3. Catering to younger generations
In recent years, credit unions have been focusing on Millennial financial behavior as a means to attract younger members. In 2020, CUs are now proactively looking at Gen Z to help shape their products and processes. While Millennials are technology-focused, Gen Z lives and breathes technology. Born between 1997 and 2012, Gen Z grew up with the Internet and require a streamlined product with a quick and convenient application process. Fintech has built its success catering to these two factors. Creating products that promote financial independence and simplifying the time and resources it takes to sign up for these products will help you increase a younger member base. Consider adding a young adult employee layer to your credit union. This age group of employees can help friends and fellow cohorts feel comfortable seeking financial help and multiple credit union services. They can also provide a fresh take on new products and services.
Security and Compliance
With an uptick in member numbers, comes heightened importance regarding security and compliance. U.S. financial institutions are taking a hit from cyberattacks with a total cost o $6.2 billion in Q1 2019 alone (compared to $8 million in Q1 2018). With valuable consumer data up for grabs, financial institutions get attacked over a billion times yearly. That means every second there are about 30 attacks. Even more threatening, these attacks are not always outside jobs. Approximately 50% are criminal, 27% are system glitches, and 23% are from inattentive employees. Protect the time and money spent on compliance by investing in advanced security measures.
How Often Should Forms Be Checked?
We recommend checking your forms at least quarterly for compliance. Making compliance into a quarterly goal can help your credit union keep up with changing regulations and provide adequate updated training to employees. The NAFCU offers a compliance resource library to keep you up to date on current regulatory compliance changes or check with your current forms provider. Short on time or resources? Consider outsourcing your forms so you can focus on current lending trends.
When outsourcing forms, choose a company that is established and stands behind its product. At Oak Tree, we have over 37 years’ experience in providing consumer lending forms for compliance, technology, and integration.
Outsourcing solves the following issues:
Holding back offering new products and services because you are not sure how to integrate the correct forms? Outsourcing forms solutions can help you serve your members faster without going over budget.
Worried about failing to comply with state and federal regulations? A quality form company can review the forms before you use them, giving you more time to devote to your CU.
Trying to keep up with forms on your own can lead to mistakes. Choosing a company like Oak Tree that specializes in forms will keep your forms looking professional, compliant, and customized for your specific needs.
Why Compliance Matters
A compliance officer is more than a quick approval at the end of the development chain. This position should be utilized throughout the project's process to access risks and provide feedback on the overall benefit the project will bring to the CU's membership. Evaluating products and services from the beginning not only fulfills a technical regulatory standard but a moral one, as well. Is this new product or service easy to understand and equitable for your members? The unique financial needs of senior citizens, military personnel, and students can play a vital role in a credit union's overall success. By providing personalized solutions for each of these groups, you can gain following and trust. All three of the above groups are especially susceptible to predatory lending. CUs can provide a positive influence for these groups to ensure they are getting the fair lending they deserve. Especially in these uncertain times, it’s important to budget for compliance. It's vital for the success of your credit union and a positive experience for your members. Our website supplies all the compliance forms your CU may need. Our top-notch customer service team is available to help you navigate the process.
Flexibility is Key
It’s important to be flexible as you aim to follow lending trends in 2020. From a volatile market, imminent recession, to connecting with younger members, many challenges need to be faced head-on. The propensity to adopt current regulations in everyday decisions can be the difference between failure and success. A focus on compliance provides your members with superior service and your credit union with a secure future.