Economic Downturns Showcase CU Lending Advantages

PYMNTS interviews Kate Rogers, senior vice president of digital and payments and chief innovation officer at University of Illinois Community Credit Union (UICCU), about how credit unions can come out on top as lenders in challenging economic times.

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CUs offer more to borrowers than just better rates. Rogers said that even when dealing with nonmembers, CUs are able to look at people as more than just numbers on a spreadsheet.

With an auto loan, for instance, dealers know that if someone does not qualify on the first try, UICCU will see if there is still a way to work with them. That personal relationship with dealers can make a big difference. While competing lenders will simply move on to the next loan approval, a CU is able to incorporate a personal touch and give more attention to each applicant.

A personal touch does not have to slow anything down. Rogers said that UICCU is always looking for ways to keep the application process as easy and fast as possible. That means prioritizing digital tools that are intuitive and user-friendly. The goal is to ensure that all applicants have their best lending experience with UICCU. Borrowers should not remember any pain or friction from the process, only the fact that they were able to get the loan they needed to buy a car that gets them to their job without seriously interrupting their lives.

Every transaction experience is a competitor with the CU lending experience. Whether they are applying for a credit card or a mortgage, borrowers today do not judge their application experiences only against other similar experiences. Rogers said that even the experiences applicants have checking out online will inform how they evaluate their credit or loan experience. Consumers today expect the loan approval process — and even funding — to take hours or even minutes, not days or weeks. Even more so, UICCU’s goal is to have a process that actually exceeds applicants’ expectations. Borrowers should have an experience they want to tell their friends and family about.

Liquidity is the biggest lending challenge for CUs in the current economic climate. There was an influx of deposits during the pandemic. Those days are over, and deposits are down across the board. Everyone, from students to retirees, is keeping less in savings and even checking accounts. Rogers said that a priority at UICCU is to manage that challenge proactively because the last thing a CU wants to do is shut down lending during an economic downturn. During the last recessionary period, there was a noticeable drop in credit card offers in mailboxes. By continuing to offer credit solutions, CUs were able to stand out from their competitors.

Special attention not only allows CUs to keep bringing in new loans but also means lower delinquency rates. Rogers said that UICCU has a proactive approach to delinquency as well. A CU is able to reach out to borrowers and give each loan a personal approach. If there is a change in payment behavior on a loan, a CU can get in touch before that borrower becomes delinquent and ask if they need help. Borrowers remember that fact when it comes time to prioritize payments that are due. They also keep it in mind the next time they are looking for a loan, or even considering where to open any other kind of account.