The pandemic has put the credit union model under stress like never before. The overnight closure of branches, mass exodus of staff and the complete shift to digital interactions made them struggle to connect with customers and provide seamless services. In fact, they owe this struggle to their lack of investment and emphasis on new technology. Added to this is the constant struggle to cope with limited resources. This is particularly true for credit unions that are still struggling to attain equilibrium. While a shift to digital infrastructure may hold a solution in a post-pandemic age, their inability to spend more dollars is a big disadvantage.
As the market emerges out of the pandemic effect, credit unions are concerned about managing their businesses in the face of these uncertainties. In this blog we look into some of the challenges that credit unions might face in a post-pandemic age and the best ways in which they overcome them.
| National Credit Union Administration’s quarterly credit union data report 2020 quotes a USD 9.4bn net income at an annual rate for federally insured credit unions. It took a 34.6% dip when compared to the net income for the same period last year. |
Remote Management
Shifting to a remote working infrastructure bring credit unions in the face of some stinging questions:
- How effective will be the communication with members over virtual platforms?
- What will be the productivity of frontline credit union employees functioning from a remote location?
- A minimum budget places credit unions in no position to run trials to conclude on the best remote working mode.
- Even if a remote working infrastructure is established, there is no guarantee on the best output to be derived from communication with members over virtual channels.
The success of a remote working management for credit unions is critically dependent on finding the right answers to these questions.
The Way Forward
Outsourcing to expert third party mortgage loan processing companies is an answer to the questions above. Here’s digging deeper into the prospects:
- Third party experts provide an access to a pool of skilled resources that provide tireless back-office support to smoothen the loan processing, underwriting, and closing processes. This frees up enough time and resources for credit unions to dedicate to organizational restructuring. In this case, it is about getting all the stakeholders on a single page to take a faster decide on the remote working situation.
- Outsourcing functions to mortgage loan processing companies would mean lesser departments to keep track on for productivity. Third party vendors take the complete onus of an end-to-end execution of tasks without much external interference. This makes remote management much easier for credit unions.
- The absence of a credit union personnel onsite is expected to make communication cumbersome through emails and cold calls for members. Engaging with third party vendors will open up access to customer support site. This department is dedicated towards providing a round-the-clock support to the credit union’s members’ needs.
Technology Adoption
Remote working condition has led to the closure of many branches of credit unions. This has eschewed the working capacity to a significant extent. In such a scenario, members are exhibiting their penchant towards cutting edge tools to keep their transactions constant with their financial institutions.
Findings of a November 2020 report by a leading Fiserv company state that 45% of US loan buyers prefer banks over credit unions as their preferred lenders.
Inadequate technological adoption is one of the chief reasons for the finding above. However, it must be remembered that credit unions are not profit-driven bodies which means that they function on strict budget. The key to a productive technology adoption is to estimate how such technologies can ease the processes for members.
The Way Forward?
Third party mortgage loan processing companies have experts who are dedicated to cater to specific loan processing functions.
- They leverage automation tools that aid in streamlining and expediting operations to a significant extent. For example, credit union employees use the conventional dispute tracking system review to avert processing a fraudulent debit card request. This is a tedious process that is susceptible to errors. Automated bots are programmed to scan the dispute tracking system at a certain time, export all the data selecting a specific date range and dispute reasons. It then proceeds to remove all the duplicate disputes from the exported data.
- Mortgage loan processing companies have phased out OCR with automation tools for a faster and accurate processing and review of loan documents. This also aids in ensuring complete adherence to all the regulatory requirements.
- Additional credit union industry veterans who comprise the resource pool of the third party vendors have specific insights into the what’s hot and what’s not in terms of technology usage in loan functions. They can guide credit unions to make a productive choice in terms of technology adoption. It includes the experts training the in-house employees on the usage of the tools.
Getting More Competitive
| The NCUA’s financial report for the first quarter of this year indicated a decline in the net interest margin for credit unions. This is considered as the steepest dip in a quarter year. |
The low interest rate environment is making the profit margin scenario even more dank for credit unions. On top of that, non-bank lenders are on an aggressive mode to gain traction among customers for loan origination. From partnering with Fintech companies to boost their online banking capabilities to running marketing campaigns, they are taking every step to set themselves far ahead in the competition.
The Way forward
The question is how are credit unions positioned in such an aggressively competitive landscape? The answer is- favorable. However, they have to play to their full potential to cement their position. It must be remembered that credit unions enjoy a granular level access to data pertaining to market positioning and spend data of competitors, spend behaviors of credit unions’ members, and other consumers. But the lack of analytical tools or experts who can run a proper data analysis is hindering the proper capitalization of the available goldmine of data.
- Engaging with mortgage loan processing companies opens access to experts who leverage predictive analytics. They use it to its full potential to feed the data into statistical models to forecast a consumer’s spend behavior, do a competitor analysis to study about the opponent’s possible marketing strategies.
- Third party vendors use analytical insights to create KPIs that help loan officers improvise their way of working.
- Engaging with third party mortgage loan processing companies over fintech firms for data analytics suite can usher significant cost benefit advantage for credit unions. Such an engagement will mean not having to maintain a data warehouse, not having to pay usage and data overage costs to fintech firms.
Member Retention
Profit margin is not the only thing that credit unions should worry about. Relationship with members is something on which they bank on for better loan origination. The prospects of building better relationships have been largely hit because of the remote-working culture. However, it is a crunch time for credit unions, and they better know the sentiments of their members rather than them narrating their needs.
The Way Forward
A critical advantage of engaging with mortgage loan processing companies is getting an access to analytical insights into customer behavior.
Experts use predictive analytics to create a machine learning-powered data model to derive customer attrition scores. These scores determine the members who are likely to shift their loyalty to a different financial institution.
The year 2019 saw a 2.9% growth in credit union which was the steepest ascent witnessed in the last 25 years.
- Mortgage loan processing experts use data visualization tools to generate granular level data insights into a member’s details. These details include the member’s lifestyle, profession, financial status, family, location, among others. These insights help in segregating members into specific groups that aids credit unions to direct personalized and extremely relevant products.
To Conclude
To look at the brighter side, the pandemic impact has opened up avenues for credit unions to improvise and adopt changes in their mode of operation. Changes in terms of member relationship management, superior technology adoption, better leveraging the available data resources, among others. Credit unions will have to do a thorough outcome analysis while incorporating these changes at an organizational level. However, given the current economic scenario, it will not be the smartest decision for a credit union to conduct such a grassroot level analysis without any external help. This is when reliance on expert third party mortgage loan processing companies will come in handy.
Who we are and why are we considered as an industry authority?
This article is penned by Expert Mortgage Assistance, a leading provider of regulatory compliant full suite of services to credit unions. Our solutions are designed to help you boost your loan origination score and improve your brand position in today’s hyper competitive market. We are fully equipped with state-of-the-art tools and technologies and a wide pool of talented resources that help you function accurately and in an expedited mode.
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