Q What role will technology play in CUs’ lending success?
A It’s important for credit unions to realize that lagging technology creates organizational inefficiencies and higher operational costs. In an environment where customers expect “right now” loan options, approvals, and documentation, credit unions are behind if they aren’t responsive.
Paper-free lending solutions can add convenience, efficiency, and security to business processes. Electronic document exchange and e-delivery with e-signature capabilities greatly streamline the document management processes associated with disclosures and closings.
The more steps that can be integrated within a loan origination system, the easier it is to meet compliance requirements.
Raddon Financial Group research indicates that unnecessary complexity in the lending process lengthens the time needed to see a loan through to approval and funding, and this creates a significant barrier to loan growth.
Q What will be some of the top lending challenges facing CUs in 2014?
A One of the biggest challenges, not only for credit unions but for the lending industry as a whole, will be compliance.
Lenders have the ultimate responsibility for regulatory compliance. New regulations and rules have caused the scope, complexity, and operational impact for both originating and servicing loans to grow exponentially.
Q How can CUs use technology to address compliance challenges?
A Within the fabric of lending compliance, both credit grantors and servicers have relied heavily on technology solutions to reduce the operational burden. Origination solutions that contain accurate calculations, warranted state-specific documents, approved disclosures, and workflow enforcement ensure that lenders can achieve compliance effectively in those areas.
Servicing technology that offers a wide range of confidential data management, client notifications and disclosures, rules-based workflow, and accurate accounting all contribute to regulatory compliance as well.
Finally, being in touch with the growing community of third-party regulatory resources for continuous information, interpretation, and clarification of new rules and regulations should be an integral part of a lender’s compliance and overall data governance initiatives.
Q What advice would you offer CUs about achieving lending success in 2014?
A Achieving lending success in 2014 will depend a lot on institutional differentiation.
Financial products are commodities, but financial relationships are not. In order to provide the best financial relationship, it’s increasingly important to create a holistic view of each borrower.
The ever-connectedness of consumers has raised their expectations. Creating a holistic view of a borrower’s creditworthiness is no longer just “nice to have.” It’s truly necessary, not only to enhance the member experience but also to help ensure compliance.
Immediate awareness and analysis of borrower information, including application and closing transactions, is becoming a daily activity for lenders.
The loan origination system should be tightly integrated with the servicing platform so all of the analytical information starts in one database and stays in one database. This approach provides greater insight about the member’s financial status and behavior.
User experience also is a key factor when consumers apply for loans. Providing tailored scenarios to borrowers gives originators the opportunity to clearly explain product options and loan terms.
Reducing the time and enhancing the experience for the customer can differentiate one lender over another. Thriving comes down to exploring every possible way to use available technology wisely.