Is tech sprawl harming your lending?
Turns out there is such a thing as too much technology — but only if it’s not properly integrated with all of your credit union’s systems, not just the core.
HOW MANY SYS-tems, both digital and manual, do your members and employees have to navigate before booking a loan? The answer may surprise you — and provide some critical insights if your credit union isn’t meeting its loan growth goals.
Tech sprawl is everywhere. Office workers everywhere often have several web browser tabs and programs open at once, toggling back and forth between them to do their jobs. And what about your smartphone? In a single day you might use up to 20 different apps to perform a variety of tasks— and maybe even make a phone call.
Yes, technology has expanded our ability to do more things with greater ease, but according to the U.S. Department of Commerce, our nation’s gains in gross domestic product are increasing at the same rate as average hours worked; in other words, we aren’t gaining any efficiencies.
When looking specifically at lenders, not all are inefficient. Some have implemented a robust loan origination system (LOS) that serves as a central hub and provides smooth integration with the core system, as well as the various third-party providers required to quickly move borrowers from application to funding. Today’s consumer expects the lending process to be fast and easy, and numerous studies have shown consumers value convenience over price or loan provider.
If your credit union is considering the move to an LOS (or needs to replace or upgrade its existing system), here are some important questions to address as you begin your search.
1. DOES IT CONNECT EFFICIENTLY WITH THE CORE AND OTHER SYSTEMS?
All software providers claim they integrate well with other tech vendors, but it’s important to do your due diligence and confirm those claims. Your LOS must not only connect with other systems, it must do so completely and efficiently.
For example, your credit union might have separate software to collect loan applications on different channels, with one for your call center and branches, another for your indirect lender, and yet another for online and mobile applications.
You probably use one system for pre-approvals, and several more for loan decisions, disclosures and funding. There are also systems that quantify CECL requirements, while others handle internal reporting. And that’s just direct lending. If you offer indirect lending, you also have to integrate with dealer systems.
2. DOES IT SUPPORT AN ENRICHED MEMBER EXPERIENCE?
Integration speed is important, but an LOS must also provide seamless connection to all the steps involved in the loan approval process, from pre-approvals to funding. The only time you should ever ask your members to submit additional information or use a different channel is if there is a problem. This includes the process for a new member.
The LOS must provide the ability to quickly and easily complete the new member application process, which may include separate systems to match Social Security Numbers, and more.
3. DOES IT ENRICH OPERATIONS?
What is often overlooked in the search for an LOS is the value it should bring to your staff. Your origination system might, in fact, integrate with your other systems, but if it requires employees to toggle among several screens and input data manually, they will likely find it very difficult to embrace. And if your LOS results in additional calls for your call center or branches, the senior managers in charge of those divisions may not be on board with it, either. The system isn’t just about the member experience it provides – your internal team must also benefit from it.
4. DOES IT HELP GROW MEMBERSHIP AND LOANS?
Member experience and integration with your dealer network are essential. However, you should also make sure your LOS has the ability to leverage existing data into growth. Which members are ready for additional loans? Which members are likely to be entering a new life stage with different lending needs? And does your LOS pull performance data and use it to improve your underwriting and pricing?
It’s important to remember that a strong loan portfolio isn’t built upon a shotgun approach; access to data, and leveraging that data, allows you to tailor your new loans to fit your goals.
WHAT TO EXPECT FROM YOUR LOS
Comparing systems can be an overwhelming process. Before beginning your search, setting a performance baseline will help you narrow potential vendors to just those that meet your needs. The following performance capabilities should be top of
mind when choosing a new LOS.
Successful implementations take time, but every month you operate on your old system, you’re leaving money on the table.
Vendors that promise significantly shorter implementation times might not be fully integrated with other systems. Longer implementation times may hamper your ability to meet growth goals. Conduct your due diligence and seek feedback from CU colleagues who have converted to the systems you’re considering.
A modern LOS must have the ability to collect an application, move to a system decision and book the loan in a matter of minutes or less.
Your LOS should have the ability to grow loans by uploading member files with approved information, allowing staff to search by Social Security Number to easily process the loan request.
Gone are the days when members need to wait for approval and lending managers speculate if pre-approvals are being priced correctly.
Your LOS needs to provide an opportunity to cross sell other products as part of the loan process.
To provide a truly positive member experience and win staff support, the LOS must reduce technology sprawl. Make sure the solutions you’re considering meet these three minimum requirements:
* It must fully implement with all systems, not just the core
* It must provide an enriched member experience, and
* It must increase operational efficiency.
To ensure your capital investment contributes to all of your organization goals, an LOS must also build a strong foundation for the future, growing members and loans with a robust account origination feature.
Brit Barker is vice president of credit union solutions at CU Direct.