Growth is a primary objective of any business, including credit unions.

Growth is a prerequisite for better service because it provides the resources for innovation and improvement. It also hinders competitors from taking market share that could result in reduced membership and fewer resources to spend on products and services.

A new source of growth

Recently, CUNA Mutual Group reported that credit union growth is slowing. The nation’s credit unions increased their loan portfolios by 0.5% in June 2020, less than the 0.7% pace reported in June 2019, due in part to slower growth in new-auto loans (-0.3% vs 0.1%) and credit card loans (-0.6% vs 0.6%).

Auto lending remains a highly profitable business—used-auto loan balances rose 1.4% in June, twice the 0.7% pace reported in June 2019.Modern technology makes it easy for credit unions that write these loans to expand relationships with new members coming in from auto dealerships. But credit unions still need another engine for growth. Fortunately, it’s possible to attract new business easily by adding one additional product—the mortgage loan.

While there are many kinds of home mortgage loans, one of the most straightforward is the home equity loan or home equity line of credit.

More akin to consumer loans than home loans, the home equity transaction is far simpler than the purchase money transaction, but it provides all of the data and insight into the member’s financial condition. Right now, this business is easy to win.

Homeowners continue to have access to a tremendous amount of equity in their homes. According to Harvard’s Joint Center for Housing Studies, aggregate home equity more than doubled from $7 trillion in 2011 to $15.5 trillion in 2018.

There are additional benefits to mortgage lending beyond organic growth, primarily related to the vast amount of personal financial data the borrower will share with the credit union during the process. These include:

• A deeper relationship with the member, especially when the credit union services the mortgage.
• More frequent reasons to contact and communicate with the member.
• Higher lifetime value in the member relationship.

Leveraging next-gen lending technology

However, to successfully compete in the home mortgage/equity marketplace, credit unions need to implement lending technology that meets evolving consumer expectations, increases the overall efficiency of the mortgage loan origination process, and keeps members engaged from application to closing.

Loan origination technology, such as the Origence mortgage lending platform—created specifically to meet the needs of today’s credit unions—offers key benefits:

• A reimagined borrower experience from the point-of-sale all the way to closing, realized by streamlining and automating the entire lending journey. This makes it easy to grow organically by providing a superior member experience.
• A more efficient origination process, through intelligent use of automation focused on cycle time reduction and staff productivity. In turn, increased efficiency reduces the cost of originating loans and improves pull-through rates.
• An integrated lead management solution that keeps borrowers on track, increasing purchase close rate and throughput.

The technology available today has opened new opportunities for growth by replacing manual steps in the origination process with an automated enterprise solution. This makes home finance a fundamental—if not essential—product for achievable growth.

Roger Hull is chief product officer at Origence, a CU Direct brand.