CLOs to become more tech-savvy and data centric

Technological, not traditional

‘Be relentless in the pursuit of revolutionizing the lending experience.’

January 9, 2019

Chief lending officers (CLOs) in the future will need be more strategic in nature, technology-focused, and accepting of change, according to two credit union CLOs.

Jon Paukovich, CLO for $5.6 billion asset Ent Credit Union in Colorado Springs, Colo., and Mike Long, executive vice president/chief credit officer for $2.8 billion asset UW Credit Union in Madison, Wis.—both members of the CUNA Lending Council Executive Committee—share their thoughts on the changing role of CLOs.

What will the role of the CLO look like in 10 years?

Paukovich: I see the role of all chief officers, not just lending, evolving rapidly away from their traditional responsibilities. In 10 years, the CLO will need to be much more technologically capable.

While still managing portfolio risk, credit policies, pricing, and yield, the CLO will need to understand and manage the member experience even before the loan application—during the auto or home buying search phase—all the way until the loan is paid off. Technology can play a much bigger role in loan servicing than it does today.

I see the lines blurring between the chief officers. There will need to be much more collaboration across the organization as the lines blur due to technological capabilities. The CLO will need to be more focused on revenue generation, as well.

Long: We will all be competing in an always-evolving digital space. While speed and convenience have always been important, it will be super critical in 10 years.

The CLO will get up in the morning trying to master the data in front of them to deliver a flawless lending experience to their members online.

Mike Long

Be relentless in revolutionizing the lending experience.

Mike Long

What new skills will CLOs need to be effective?

Paukovich: To fulfill the new requirements I mentioned earlier, technological skills will be critical. As data becomes more prevalent, and tools are enhanced to organize and analyze data, CLOs must understand how to interpret the data and put it into action.

They will have to be analytical in discerning what data is relevant and predictive to make sound business decisions. The CLO also will need to be skilled at vendor management.

Most credit unions will not have the financial wherewithal to compete with the billions of dollars the large national banks spend on technology each year. Chase budgets $7 billion to $8 billion annually on technology, and even BB&T budgets $1 billion.

Credit unions will have to collaborate with vendors who can deliver a similar type of technological capability at a much more palatable cost.

CLOs will be exceptional people managers. As the labor force gets tighter, the CLO will need to make the loan department a compelling place to work and provide meaningful career opportunities to a new generation of employees.

Long: Every credit union I know is trying to figure out big data and the implications for their lending operations. Those that possess the ability to analyze data, see trends, and anticipate needs will be most effective.

How will the CLO’s day-to-day role differ in the future?

Paukovich: It will certainly be less tactical and more strategic. Technology will probably absorb some of the day-to-day responsibilities.

Long: They’ll be filling the roles of data scientists and application designers/engineers. We'll see fewer underwriters and processors.

How will this change credit unions?

Paukovich: It’s a real opportunity. Large financial institutions—those driven primarily by quarterly earnings—are going to push hard on reducing costs through technology. The human element will be diminished.

Much of the research I still see is that people, even the younger generations, want to have the option to interact with a human. Credit unions have the ability to be technologically capable but still provide the unique experience that comes with being a member of a financial cooperative.

Long: The member experience will be greatly influenced by tomorrow’s technology.

Members will desire a combination of the online tools that automate their financial lives, but still need the helping hand of a credit union professional to guide decisions that affect their lives.

What advice would you offer chief lending officers to succeed in the future?

Paukovich: Don’t be afraid to change and challenge the status quo. Many of the lending products we deliver to members are steeped in traditional methods of fulfillment. The fintechs have started to challenge traditional models, whether they’re delivery methods or underwriting models, and raise the bar for ease of use and speed.

CLOs need to embrace the challenge and experiment. Don’t be afraid of failure. If something doesn’t work, try something else.

Long: Embrace change. Master data. Push the boundaries of automation. Be relentless in the pursuit of revolutionizing the lending experience for your members.