Credit unions looking to grow member loans should invest in their technology infrastructure to meet the needs of current and future members, a CUNA Mutual Group researcher told an America’s Credit Union Conference Discovery breakout session audience Wednesday.
“How do you get new members in the door? By investing in technology, not loan officers and new lending processes,” says David Polet, voice of customer research manager.
Credit unions will grow loans by focusing on how consumers shop. With today’s technology, consumers no longer have to rely on the credit union for information.
“Members have the ability to compare rates and quotes for loans at the tips of their fingers,” Polet adds.
Credit unions need to adapt to the changing shopping landscape in order to grow loans. Fifteen years ago, the loan officer controlled the lending process because the consumer didn’t have access to as much information. Today, that’s not the case.
“Generation Y consumes and makes decisions completely differently than their parents,” Polet notes, urging credit unions to embrace technology to meet generation Y’s needs and to attract new members for loans.
“Baby boomers are retiring; their lending lives are coming to an end. That’s not the case for generation Y, whose lending lives are just beginning to grow,” Polet says.
Credit unions must focus on meeting the expectations of generation Y, especially since there are 84 million gen Y consumers versus only 80 million baby boomers, according to 2010 U.S. Census Bureau findings.
Banks have more technology that’s in tune with what gen Y consumers expect, he explains. “Picture check deposits, text banking, and mobile banking are all being embraced by banks,” he says, highlighting the need for credit unions to do the same.
In fact, many analysts predict mobile banking will overtake online banking in just a few years.
“You must know your members and potential members to effectively use new technology,” Polet says.
According to a December 2009 Mercatus mobile banking study, mobile financial service capabilities were more influential in a consumer’s decision to select a financial institution than availability of online banking, access to ATMs, or nearby branches.
The study also indicated that by 2014, more consumers will access their accounts through mobile devices than through the Internet.
“Mobile banking is clearly taking over the online channel,” Polet says. “Keep in mind, in order to grow member loans you must grow your membership, which means your technology must benefit future members.”
Polet cites several Filene Research Institute resources to help credit unions understand the needs of potential generation Y members:
- “Customer Experience and Credit Union Opportunities: A Collaboration with McKinsey and Company;”
- “The Future of Member-Facing Technologies in Credit Unions;” and
- “The Changing Consumer.”
He also recommends a CUNA Mutual white paper, “Lending Strategies and Trends” [pdf].