Virtual lending to millennials will be critical to the future success and sustainability of credit unions, but it’s important to be cognizant of the growing risks posed by expanding online channels and take steps to mitigate them, CUNA Mutual Group’s Jim Bullard told a Discovery Conference audience Thursday.
The Discovery Conference is an online conference hosted annually by CUNA Mutual Group. Participants can attend sessions and hot topic chats virtually with on-demand content available 24/7 following the conference. Discovery’s on-demand sessions are available after the conference at no cost.
Bullard, a senior consultant in Risk and Compliance Solutions, said all aspects of the consumer lending process--application, approval and funding--are moving quickly toward reliance on a virtual technology environment due to consumer demand for convenience.
Mobile lending is increasing across all generations, but it’s no secret tech-savvy millennials, ages 19 to 35, are becoming the most sought-after demographic in several generations, Bullard said.
“Successful lending to millennials in a virtual world requires your credit union to provide a seamless, end-to-end experience. The challenge is to create enough friction during the process to adequately authenticate your applicant, but not so much that causes the prospective member to end the session and look for a lending solution at one of your competitors.”
Bullard urges credit unions to use layered security, also known as multi-factored authentication in the new account process to help mitigate the risk of fraud. “Evolve your authentication beyond traditional methods such as username/passwords and challenge questions to more sophisticated means, such as ‘out-of-wallet’ questions, fingerprinting and other biometric tools,” he said.
He also suggested using an identity verification/fraud service. Bullard cited California-based CUneXus Solutions as one option for credit unions to consider. CUneXus is a technology startup providing credit unions with mobile marketing technology to quickly and easily offer pre-approval for personalized lending products. CMFG Ventures, the venture capital arm of CUNA Mutual Group, invested in the startup earlier this year.
Credit unions should also adhere to their regulatory-mandated ID Theft Red Flag program. “A Red Flag policy is not a dusty binder on the top of a filing cabinet in an office nobody goes in to. It should be a living, breathing policy that is updated as needed and a prominent part of the online application process,” he said.