Lending

Lending in the Not-Too-Distant Future

See what the member of the future, Olivia, will expect from CUs.

July 25, 2011
KEYWORDS communications , loan
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I’ve always loved science fiction. I watched all the Star Trek shows and movies, marveling at the predictions of what the world would look like 300 years in the future.

Interestingly, while some of the predictions are still in the realm of science fiction, many have already become commonplace. With that in mind, I’m going to predict the future for consumer lending.

My credit union member of the future—let’s call her Olivia—will expect to use technology for most everything she does. While she will have a communication device, it’s not a phone. The concept of a phone is as obsolete as the telegraph is today.

Subscribe to Credit Union MagazineThis communications device allows her to be in contact with friends, family, and others instantaneously. Rather than text, instant message, tweet, or post on Facebook, she tells the device what she wants to communicate and to whom.

The device then makes sure the communication gets to the appropriate person in the format that either has been specified, or that’s in the preferences profile of the people to whom she wishes to communicate.

Olivia doesn’t need to check to see if she has received any communications from others. The device prioritizes messages and communications based on criteria she has given it.

Some messages are transmitted to her immediately while others are kept for her to review as she wishes. She uses this device to keep track of things such as groceries, and transmits that information to merchants so they’ll know what she needs and when she needs it.

The merchants will make sure Olivia’s items are delivered or ready for pick up based on her instructions.

When Olivia has financial services needs, she will expect her credit union to provide the same sort of service her grocer provides. When she needs to borrow money, the device will communicate with pre-selected financial institutions to let them know what her need is.

Olivia will expect that the institutions will be able to provide her with the information necessary to choose the product that best meets her needs. She will require them to be ready to provide her loan in a number of ways, depending on what’s most convenient for her—electronically, in person, or in any other way she requires.

It is likely her preferences will change from one transaction to the next. Just as her grocer will need to be ready to either deliver her groceries or have her pick them up, the credit union will need to meet her needs in her timeframe to make a loan to her.

While it’s comforting for lending professionals to feel they have some control over how they make loans available to borrowers right now, it’s a buyer’s market both in the short- and long-term. Your members increasingly expect you to lend them money how and when they want it delivered, not caring what is best or easiest for you.

The scenario I paint isn’t so far-fetched. Just like some of Star Trek’s predictions came true in a short time period, this world of instantaneous communications and response isn’t far in the future.

This is the world my teenage daughter, Olivia, lives in now. How are you preparing to serve her world?

BILL KLEWIN is the director of regulatory compliance at CUNA Mutual Group, Madison, Wis.

Interesting

Bill Vogeney
August 01, 2011 5:21 pm
Bill, I think your article states the obvious-at some point in time, making loans via mobile banking will be the standard for lenders....but for the very best borrowers. Call them A or A+ credit.

Time has proven those who think they can "innovate" lending to mid-prime and sub-prime borrowers(think Centrix, think 100% LTV pick a payment home loans, think credit card lenders who made too many high limit cards in the mid-2000's to borrowers in the 620 to 660 range, etc) ultimately fail and have to pull back dramatically if not go out of business.

Borrowers with less than perfect credit tend to cause losses that are more volatile than losses to borrowers with excellent credit. Loans to mid and sub-prime borrowers require more work, more analysis, more understanding of the borrower. That's where credit unions come in.

I think the move to automating more and more of the lending process will leave many of these borrowers on the sidelines, needing loans. Credit unions who can build relationships with these borrowers and made educated decisions based on an understanding of the borrower have a fighting chance of building the loan volume we're all looking for.

Bill Vogeney
Ent FCU


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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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