If there was still any question that the digital revolution in financial services is fully upon us, the world-changing events of 2020 have removed all doubts.
The coronavirus (COVID-19) pandemic highlighted several challenges facing credit unions—above all, the urgent need to provide employees with the ability to work remotely while continuing to serve their members.
For example, I work closely with a mid-size credit union in the southeastern U.S. In March 2020, that cooperative redeployed all but 8% of headquarters employees to work from home. The credit union was forced to pivot quickly to remote work for virtually all roles, including commercial and personal loan officers, who, for the first time, had to figure out how to interact with borrowers in an entirely virtual environment.
With this experience in the rearview mirror, credit unions must prioritize their employees’ abilities to securely access data and critical software needed to meet member needs— anywhere and anytime.
When my wife and I applied for a new personal mortgage last year, we noticed a stark difference between working with our local credit union and with one of the better-known “big banks.” Although we wanted to originate our loan through the credit union, the application process was clunky and confusing, marked by highly manual processes, wet signature requirements, and in-person document exchanges. In contrast, our experience with the bank was a breath of fresh air. The process was fast, and all steps—from application to approval to closing—were completed through a secure, digital platform.
In commercial lending, lenders’ experiences with the Payroll Protection Program (PPP) were eye-opening as well. Those credit unions that quickly implemented cloud-based digital processes to accept PPP applications and grant approvals and deliver funding to businesses proved instrumental in helping those businesses keep their doors open. Credit unions also contributed to saving tens of thousands of jobs while earning grateful, loyal new business relationships.
Bottom line: institutions that have figured out how to digitize their lending processes are creating faster, more streamlined, and better borrower experiences.
Post-pandemic, the guiding principles of savvy financial institutions include: a consistent view of changing risks, the ability to provide an outstanding member experience, and a commitment to continual, iterative development.
Digitization is the common element of all three core principles. By digitizing manual processes and moving them to the cloud, credit unions can succeed in lowering costs, improving efficiency and productivity, and creating an improved member experience. In addition, digitization can improve agility and speed to market, allowing credit unions to compete with even the largest banks and retain member relationships for the long term.
To get a head start on the digitization path, seek out a vendor partner with a proven solution. Now, more than ever, credit unions need to engage trusted partners that have already been down the road to guide them along their digital journeys.
ROBBY HOLDITCH is director of the risk and accounting group at Moody’s Analytics.