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Is Your Credit Union Ready To Reimagine Lending? Your Members Are

From the moment they start to fill out an application, borrowers expect the entire process is frictionless and easy.

Credit unions used to say every borrower is different. In today’s digital-first world, it seems all borrowers have one attribute in common – they want everything now.

From the moment they start to fill out an application, borrowers expect the entire process is frictionless and easy. They also want to have control over the steps. To be competitive in a world where taking 10 to 15 minutes to approve or decline a loan is “too long,” credit unions need to improve their auto-decisioning capabilities and have a way to connect with partners of all types.

There is an urgent demand to increase credit union connectedness to the outside world and marketplaces. Origence is helping credit unions do this by expanding our API (Application Programming Interface) capabilities with a robust API solution set for lenders. Our credit union partners have access to our existing APIs, as well as insight into new APIs we are in the process of building into our lending platforms via our Developer Portal. This gives credit unions the ability to create better experiences for their member.

Lending and Credit in a Digital-First World

I recently had the honor of moderating a panel at the Origence Lending Tech Live ’22 conference that addressed reimagining lending and credit in a digital-first world. We brought together experts from the three credit bureaus – Kathleen Maley, VP Analytic Products for Experian, Blake Woods, Senior Advisor at TransUnion, and Thomas Aliff, Senior VP and Risk Consulting Lead for Equifax – along with Mike de Vere, CEO of Zest AI. Origence announced a new partnership with Zest AI during the conference, giving our credit union partners access to AI-based decisioning and credit scoring methodologies.

The panelists brought a fascinating perspective on the data assets that they have developed and how credit unions can use them to become better players in the digital market. We all know COVID increased the adoption rate of digital tools. Credit unions want to know what tools are available and should be used, such as robust AI modeling and trended data. The main takeaway was this: while credit unions still need to follow the basics, such as verifying income, auto-decisioning rates need to go higher. Origence, along with the bureaus and Zest AI, has the tools and technology to help make that happen.

Artificial intelligence plays a big role as lending evolves, helping to lower risk while improving efficiency. In addition, credit unions need access to credit reports, verifications, and other valuable data integrated with their digital origination platform. Credit bureaus and AI companies in the financial services space are focusing on decisioning as a service, which is front and center with lenders. This means taking custom scoring models and leveraging various sources – AI, data, and scoring models – to create models that can be quickly evaluated in market and potentially changed if necessary.

Digital lending technology is improving, allowing more approvals with better results in the form of fewer collections. One lender told me his credit union is using this tech because their goal is to attract a younger audience and make better decisions about them. The bureaus have been accumulating data sources and tools, and data scientists are creating models, all of which provide capabilities that credit unions don’t have on their own.

It should be noted that the three credit bureaus are quite different from each other. Experian has a homegrown product that consolidates data in the company’s platform. TransUnion has a different approach centered on partnering with various platforms, while Equifax has its own tools. All the capabilities the bureaus offer collectively should be seen as an arrow in the quiver for credit unions. Origence is partnering with all three to deliver digital capabilities that help credit unions advance their lending programs and member experiences.

Importance of Partnerships

When we look to partner with any company, the key question is: How will a new alliance help us fill in feature and functional gaps and/or allow us to offer a differentiator to our credit union clients? Our clients want capabilities and choice, so we try to offer access to the best-of-breed providers.

The build versus buy question is always a consideration. Strategically, Origence has recognized the need to focus on our core offerings. In the past, however, we looked at developing much of the platform technology and functionality ourselves. But the challenges that accompany that strategy can be numerous. It is difficult to be the best at everything, so to provide our credit unions with the best possible platform, it is important to find the right partners. The richer our integrations are, the better the platform experience is for credit unions and members.

Auto dealers have been adopting digital storefronts, meaning the ability to take consumers to virtual showrooms. The Origence platform serves 16,000 auto dealerships and 1,100 credit unions nationwide, so our priority is to make sure that credit unions have the technology to be well-positioned to succeed in this new, ever-changing environment.

Technology That Delivers

Financing is evolving to take place in the palm of the borrower’s hand, and the playing field is shifting dramatically. As the lending process and experience continues to transition to digital/online, credit unions need to be positioned to take full advantage of the technology available. Credit unions have low cost of funds and great rates, so they are more than capable to compete, as long as they have the technology to remain at the top of the funnel for indirect and direct lending channels.

In this new world of AI and decisioning, with shifting channels and speed, credit unions realize they need to be automated. But the movement to get there is far from complete. As more data converges, the models get better and allow decision rates to increase. As this happens, it is mission critical for credit unions to increase their auto-decision rates.

The technology will continue to be refined, and risk underwriting predictability will improve. AI models can parse through more data and catch factors that humans cannot. This will only increase the rate of change. As a lender, having the right data and the right tools allow you to see the trends and adjust more quickly. This is a core capability that lenders will need to master as the digital world continues to progressively change the lending landscape.

Discover how Origence can help your credit union reimagine lending.