As member-first institutions, credit unions need to provide seamless, personalized services. To meet these expectations, credit unions are ramping up their digital transformation efforts to keep up with an increasingly digital banking landscape. 

This focus on digital transformation is a smart investment. Many consumers turn to digital for their banking needs. In fact, 71% of consumers use online banking tools to manage their finances at least once a month.¹ When it comes to accessing and managing debt, consumers – especially younger consumers – factor in how well an institution’s digital services can meet their needs:

• 70% of Gen Z say that they would base their lender choice on online portals²

• 59% of Millennials agree that online portals are an important part of their lender choice²

Consumer preference for digital transactions continues to grow. Credit unions understand that prioritizing and implementing digital transformation efforts is no longer on their wish list – it is a necessity. Yet many credit unions are having trouble keeping up:

• About 66% of credit unions say they are in the nascent or developing stage of digital maturity. While they may have online banking functionality, they are in the development phase of enhancing physical and online experiences for their mobile applications.³

• This is in comparison to 31% of regional banks and 45% of community banks that are in the nascent or developing stage of digital maturity.³

Digital transformation efforts span the entire member lifecycle, from:

• acquiring new members,

• to onboarding,

• to offering easy to use day-to-day financial management solutions, 

• to helping members access and manage credit. 

Through all phases, it is important to integrate identity verification, data security, and fraud prevention. Let’s explore a few strategies that credit unions can consider as they seek to advance their digital capabilities.

Pivot outbound acquisition efforts to digital

How much are you relying on digital as part of your acquisition efforts? Can you reach online audiences that you want to attract as new members? Are you using digital to promote your credit offers?

Digital targeting can help you reach consumers that you might want as new members, plus fuel your deposit gathering efforts. For example, you can target online ads at local audiences that are likely to hold significant assets or deposits. Or, if you are testing a new deposit promotion, you can go further by targeting high-asset online audiences that are likely CD or money market investors. 

One firm shifted its digital ad spend toward audiences that were likely to hold over $100,000 in assets. By doing this, it was able to increase the expected opening balance for new accounts from $10,000 to over $18,785, an 88% improvement.

To advance your credit acquisition campaigns, it is important to consider digital channels. For example, you can develop a targeted Prescreen list for your next lending campaign. Then, you can send emails with your firm offer of credit directly to that audience. This can be much cheaper than relying on direct mail. 

Or, you can follow up a direct mail campaign with the same offer delivered via a personalized email. Email can be an advantageous way to deliver your credit offers to younger audiences - especially Gen Z and Millennials. Particularly since direct mail may go unnoticed by younger populations. 

Empower online credit seekers to better explore your lending offers

When consumers – either prospective members or current members - come to your website and start the process to apply for a new loan, do you track the abandonment rate? Some consumers get a bit skittish about all of the information they have to supply. And some are concerned about the potential impact that their loan application may have on their credit score. 

To help consumers, consider implementing a prequalification service on your site. This allows individuals to better understand their credit eligibility for offers. Consumers can be presented with multiple prequalification offers. Then they can decide if they want to move forward with a full credit application. This can help credit unions better engage with both prospective new and current members. Plus, tailored prequalification offers may be more appropriate for specific audience segments.

Another option is to deliver personalized, pre-approved lending offers when members log in to your website. You can use your own criteria to segment audiences and match them to the right offer. By delivering appropriate offers, you can more quickly develop new lending relationships. 

Boost onboarding and digital interactions while minimizing fraud

Digital solutions can be used to improve the member onboarding experience and support seamless transactions, while at the same time providing strong security shields to mitigate fraud.

For example, during account setup you can use digital identity information to verify consumer identities in real time. In addition, forms can be pre-filled with authenticated consumer data. Authenticated data can streamline applications and reduce data entry error. Then, consumers can more smoothly maneuver through what may be their initial experience with your credit union. At the same time, you can reduce fraud and the need for manual reviews. 

Digital identity information as well as authentication solutions can also be used to verify consumers as they conduct online transactions such as account login, bill pay, and fund transfers. Offering services such as two-factor authentication and knowledge-based security checks is now quite common across the financial industry. These services can in fact be comforting to many consumers as they feel more confident that their credit union is protecting their sensitive data. Device authentication is another way that credit unions can verify identities while also minimizing fraud. 

To speed loan applications, credit unions can integrate behind-the-scenes digital income, employment, and education verification solutions. This can go a long way in providing members with faster access to credit and helping them buy a car or home, or accessing funds for other needs. In fact, lenders who leveraged income and employment verification data were able to provide lower interest rates or better loan terms to borrowers across all credit bands when compared to lenders who did not use these resources. And, they saw an estimated 19.6% increase in profit from growing their loan portfolios.⁴

Another growing problem that credit unions must contend with is synthetic identity fraud. With an estimated $1,830 in bad balance per fraudulent account,⁵ it doesn’t take long for fraud losses to pile up. To limit losses, credit unions can incorporate alerts to continuously recognize accounts likely opened using synthetic identities. 

By combining best-in-breed digital verification, authentication, and fraud detection solutions, credit unions can shift away from their hodge-podge of legacy systems. Instead, they can rely on sophisticated, multi-sourced solutions that enhance the member experience across multiple touchpoints.

Advance your digital maturity

Credit unions that understand member needs, offer relevant products and services, offer seamless interactions, and securely protect member data are better positioned to deepen member relationships. By integrating digital solutions throughout the member lifecycle, credit unions can better adapt their organizations to meet their goals and encourage member loyalty.

To learn more, please view our Digital Acceleration and the Customer Journey white paper. And, discover how to Speed Loan Decisioning with Digital Income and Employment Verifications.  

 

1. The stats of digital banking, 2022 Forrester, as reported in Connecting is the Key To Success for Financial Institutions by Equifax, 2023.

2. The stats of digital banking, 2022 Forrester, as reported in Connecting is the Key To Success for Financial Institutions by Equifax, 2023.

3. Survey by Arizent Research and American Banker, published by American Banker, 2023

4. Improving Loan Conversion Rates With Data, Equifax white paper report, August 2022.

5. Urjanet Survey as reported in Digital Acceleration and the Customer Journey white paper by Equifax.