Credit unions have long faced intensifying competition from nontraditional lenders targeting specific segments and gradually expanding their reach—think SoFi, Rocket Mortgage, and OnDeck—as well as large banks with seven- and eight-figure marketing budgets.
This challenge predates the recent period of inflated deposit balances that financial institutions of all stripes strained to put to productive use. And the pandemic merely exacerbated another trend that was already well underway: a steady decline in branch traffic as many consumers and business owners demonstrated a preference to perform financial functions digitally.
The necessary closure of walk-in facilities neutralized a big credit union advantage: the intimacy of in-person member relationships.
Fintech firms are often cast as the villain in this battle for hearts and minds in the digital arena— and in cases like the previous examples, for good reason. Increasingly, however, these innovative firms, less constrained by regulation, are leveraging their nimble culture and technology savvy to partner with credit unions, opting for a “rising tide lifts all boats” approach.
Three credit unions, each with distinctly different profiles, explain how they’re deploying lendtech solutions within their organizations.
All In Credit Union has 30 branches, all within a four-hour drive of its operations center in Alabama near Fort Rucker, the only Army base providing helicopter training to its servicemembers. Like many military-affiliated credit unions, All In sees its members fan out across the country and overseas.
Sure enough, the $2.7 billion asset credit union in Daleville, Ala., serves members in all 50 states. Not surprisingly under those circumstances, two-thirds of its loan applications are submitted online.
Todd Peeples, senior vice president of sales and lending, felt an acute need to upgrade that digital experience. “You couldn’t save an in-process application, you had to hand-key all information,” he recalls.
All In had already been working with Zest AI for roughly two years, leveraging the firm’s artificial intelligence (AI) solution for auto decisioning. It uses Zest AI to automatically approve or deny 75% of its auto, boat, and recreational vehicle loan volume, Peeples says. “The remainder in the gray area we refer to staff to take care of. Zest AI’s solution also decisions essentially 100% of credit card applications.”
‘We've taken the philosophy of partnering with them vs. seeing them as competition, and it's paid huge dividends for us.’
It was the earlier portion of the funnel, before a completed application arrived, that still required enhancement. Enter 3-year-old fintech WithClutch, which now facilitates digital applications for All In’s entire loan portfolio except mortgages and home equity loans. It predominantly supports auto refinancing.
“It prefills the form based on the applicant’s phone number and last four Social Security digits, then cross-sells both on the spot and feeds leads to our reps,” Peeples explains. “It’s really simplified the member process. It even provides the VIN [vehicle information number] and says, ‘Here’s a picture of your 2020 Ford F150. Would you like to refinance at this rate?’ It’s definitely helped our numbers.”
Peeples has documented a 10% to 15% lift in closings even before factoring in the cross-sell benefit. For every 100 applicants the credit union receives online via WithClutch, the system generates 145 loan applications, equating to a 45% cross-sell rate.
Through their work at All In, WithClutch and Zest AI realized the natural synergy that existed between their offerings and tightened their integration, enabling greater speed to market for mutual customers.
Peeples, who has been in sales leadership for more than five years, brings a unique perspective to his role. “We’re proactive with tech. My background is a little different: Before I was the head of lending, I was the head of IT.”
“We have partnerships with fintechs that bring us loans, and with others that improve our processes,” Peeples says. “We’ve taken the philosophy of partnering with them vs. seeing them as competition, and it’s paid huge dividends for us.”
While he’s always on the lookout for promising new solutions, Peeples finds that All In’s tech-forward reputation has streamlined that task as well. “We’ve been open enough that folks now are coming to us. More fintechs are seeing the possibilities with credit unions, realizing we’re easier to work with.”
NEXT: Combating competition