COVID-19 has helped us to understand how data, analytics, and technology can simplify everything – right from placing orders online to getting door-step deliveries, having video chats with the family to running a business smoothly via digital mediums among others. Similar effects can be seen when it comes to lending in the financial industry. These transformational changes are triggered by emerging customer behavior, growing expectations, fintech disruption, newer channel proliferation, as well as the adoption of cutting-edge and innovative technologies, and rapid digitization of business and community.
So, for a better understanding of lending transformation; a webinar was conducted by CULytics. It is about how most progressive financial organizations are responding to challenges and making decisions to stay relevant and serve the best.
Jason Pieratt (Data Analysis Manager at Park Community Credit Union) hosted the sessions with the speakers - Jade Beckman (Vice President Consumer Lending at Mountain America Credit Union), Vishal Kaistha (Product Manager at First Tech Federal Credit Union), David Mitchell (Senior Manager at Portfolio Risk and Operations Alliant Credit Union), and Patrick Wiginton (Loan Origination System Officer at America’s First Federal Credit Union).
Followings are the highlights of the session:
- Lending Transformation:
Due to COVID, acceleration to Digital has increased as new technology and vendor partnerships increased. Let the members know what are the offers, how to access them, and accept those offers. Help them understand that things can be done digitally through mobile banking, transactions, etc. Also, get associated with the best-of-breed service providers, mobile providers, and bring in the best-in-class third-party vendors & plug in with mobile vendors to enhance the digital experience of the members. COVID-19 has helped people know digital things more and come online to perform actions that were previously completed through physical branches. This will help the management more comfortable to put things together and make plans from a strategic standpoint.
Some big changes like data entry can be automated and the workforce can be reserved to support and solve queries of the members and vendors to enhance the digital experience of the members. The use of mobile banking has increased due to COVID, so take things online to avoid physical interaction/ contact.
- The Lending Lifecycle
The lifecycle of any element comprises of steps taken to make and maintain that particular element. For example- The loan cycle begins when a prospective borrower inquires about it, and it ends when the borrower pays off the loan. Similar is applicable for Credit Cards. Members can be incentivized to encourage the use of credit cards and make timely payments. For this, use the data and make suitable decisions. It is seen that the response rate increases when members are incentivized.
- Post-COVID Changes
The COVID-19 crisis has increased the need for digital lending platforms and processes than ever before. So, to respond to the needs of the existing borrowers and future borrowers, it is required to simplify the process and offer more options to borrowers. Also, financial institutions need to take preventive measures to be in a safe place. For example- before COVID, no income verification was required or generally asked but it will be good to check in this time. Make observations based on the data. To find out the member behavior, a trial was done by observing 30, 60, and 90-day activity of members, who took the card to find out- What they are doing with the card? Results were interesting as about 80% did balance transfer that was as per expectations.
To bridge the gap between old ways and new ways of doing things can be considered with 2 Ps i.e. Patience and Progress. Be patient at every step of progress as transformation doesn’t happen overnight. Look at the data available and coming from the usage of products and make decisions keeping a user-friendly interface, quick initial decisioning, cloud integration, and advanced metrics at the core. Personalization can be done to meet the expectations of the members. Know the needs of the members and take measures to fulfill them to build strong and long-lasting relations. Use data, tie together data points to come to a conclusion to simplify a lot of manual work.