In the competitive financial industry, credit unions have to do everything they can to stand out—not just from other credit unions, but also from traditional banks and disruptive fintech startups. How can credit unions hold their own?
By embracing the latest technology and innovations, even the smallest community credit unions can thrive in a saturated market. In this guide to the top five credit union technology trends of 2020, you’ll learn which must-have features you’ll need to attract new customers and discover the full potential of your lending portfolio.
5 Credit Union Technology Trends That Will Matter in 2020
To provide the best service, your technology must support your efforts. If you’re still using an outdated legacy system to structure loans and store customer information, you’ll quickly get outpaced by other financial services providers. Using the latest banking and lending software, it’s much easier to stay in touch with your customers, keep their information up to date (and secure), and structure low-risk loans with attractive interest rates.
Which updates should you focus on when you upgrade your legacy system? These are the top five credit union technology trends for 2020:
- Cloud technology and storage;
- Advanced data analytics;
- Machine learning and artificial intelligence;
- Multichannel automation; and
- Bolstered cloud security and compliance.
Before you upgrade your banking and lending system, here’s what you need to know about each of these credit union technology trends:
#1: Cloud Technology and Storage
Mobile banking was once the gold standard for financial institutions looking to stay up to date on the latest technology. However, now that almost all financial institutions use some form of mobile banking, credit unions are seeing the value in taking this one step further. More credit unions are upgrading their systems to include partial or even full cloud computing and storage to make mobile banking more efficient. Cloud technology is:
- Often as safe or safer than data stored on-site;
- More cost-effective (less server maintenance); and
- Great for backing up important data and performing detailed data analysis.
When you outsource cloud technology to an experienced and trustworthy provider, you’ll also gain their expertise, so there is a lower learning curve. The technology is now so secure, readily available, and easy to implement, more providers are upgrading to a cloud-based banking and lending system.
#2: Advanced Data Analytics
Data is by far the most powerful tool that credit unions have. The only problem is that many credit unions aren’t fully leveraging their data. One of the biggest credit union technology trends of 2020 is the emergence of advanced data analytics software that was once only available to large banks.
Credit unions now have access to this same technology at a fraction of the cost. Even smaller credit unions are using highly advanced analytics methods like alternative credit data, predictive modeling, real-time trends, detailed data visualizations, and more to assess loan risk. Data analytics also helps resolve delinquent loans quickly and keep default rates as low as possible. If you only make one upgrade to your loan management system in 2020, prioritize data analytics.
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#3: Machine Learning and Artificial Intelligence (AI)
The most successful credit unions are already using machine learning algorithms to structure low-risk loans, reduce default rates, and make their customers feel more supported. When you upgrade to a loan origination software (LOS) that includes AI and machine learning features, you can:
- Learn from past defaults or delinquent loans and identify common risk factors;
- Manage your existing portfolio via automatic pricing and line of credit adjustments;
- Understand what your customers need and set up automatic notifications or services that anticipate these needs; and
- Answer your customer’s questions quickly and stay in constant communication with them.
You don’t need to hire a massive staff of customer service agents and loan officers to deliver these sophisticated services. Machine learning and AI get the job done.
#4: Multichannel Automation
Customers now have many ways to contact their credit unions. They can visit a branch in person, send a representative an email, log into their mobile banking app, or call a representative directly. How can credit unions maintain an open line of communication through all of these channels without dropping the ball?
Multichannel automation is the answer. This credit union technology trend leverages auto responses and other types of autonomous decision-making to respond immediately to a customer’s inquiries.
Another reason why this credit union technology trend is so popular is because it speeds up the lending process. When you upgrade your legacy LOS to one that includes automated features, you can get a decision on a loan or new line of credit within minutes. This saves your staff and your customers from wasting any time.
#5: Increased Cloud Security and Compliance
Whenever you update a system or incorporate new technology, you have to maintain strict compliance standards and ensure that your customer’s data is well-protected.
To do this, you should work with an experienced LOS provider and other data security experts to:
- Backup data;
- Encrypt sensitive information;
- Obtain alternative credit data in a fair and legal way;
- Protect your customers from common scams and fraudulent account activity; and
- Create secure logins for every member of your staff and only give them access to the data they need to perform their jobs.
When you focus on these security challenges in particular, you’ll keep customers safe and protect your credit union from costly fines and legal trouble. Today’s most advanced banking software and LOS systems are designed to address these vital security details.
How to Take Advantage of All of These Trends
Knowing the top credit union technology trends is only the first step. How do you incorporate all of these important trends into your banking and loan system? You need new software that does it all.
The most advanced credit union software now includes all five of these essential capabilities rolled into a single service. By upgrading your credit union’s loan origination software (LOS), you can:
- Store important data securely in the cloud;
- Automatically perform detailed loan risk and customer data analysis;
- Use AI and machine learning to optimize portfolio performance;
- Comply with all of the latest mobile banking and loan regulations; and
- Offer your customers more loan options, better rates, and attentive customer service.
These are just a few advantages you’ll see when you upgrade your legacy system. With these tools, you’ll stay ahead of the competition and prove that your credit union is the best choice for savvy customers.
defi SOLUTIONS is an experienced LOS provider that uses the latest technology to improve the banking and lending process. We have years of experience working with credit unions and other financial institutions, and will help you upgrade your system so that you can provide the best possible service. If you’re ready to update your legacy system, contact our team today or register for a demo.
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