ALPHARETTA, Ga.–During its recent Raddon Conference, the company said it identified five takeaways that can help credit unions “navigate a path to prosperity.”
Its fourth annual Raddon Conference attracted more than 1,700 industry professionals from 52 states and territories and featured 10 different sessions during which the company laid out its view of the challenges and opportunities ahead.
The five takeaways include:
Focus on Efficiency, Not Cost-Cutting
“The low-rate environment that plagued most of the 2010s is back, and the yield curve is even lower now than it was then,” Raddon stated. “While this environment will make loans attractive to many borrowers, as seen from the industry’s perspective, it puts immense pressure on margins and, as a result, profitability.
“Financial institutions will need to be aggressive about efficiency, but that does not mean cutting expenses to the bone. Raddon analysis shows that revenue is the key to efficiency, especially depth of relationship or share of wallet.”
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Integrate Your Delivery System
“While the COVID-19 pandemic has accelerated adoption of digital services among groups that may previously have resisted, increased digital usage is only one side of the delivery coin,” Raddon reported. “Consumers have also shown a persistent and rebounding desire to use branches and other in-person delivery channels.”
Process Replaces Product and Price
“In a low-rate, low-margin environment, competing on price is challenging,” noted Raddon. “Fortunately, for many consumers, process trumps price, as many consumers are willing to select an option that might be slightly more expensive if they get something easy and available in return.
“2020 and 2021 could shape up to be the strongest years for consumer lending in well over a decade as stated demand, particularly for credit cards, is higher than before the Great Recession,” the company added. “In addition, low long-term rates have sparked interest in auto and home purchases. To capitalize on this demand, lenders must improve their application, approval and funding processes, especially as 60% of Millennials agree that ‘getting a loan is a long and difficult process.’ More troublingly for banks and credit unions, 56% agree that ‘it is easier to obtain financing through an online lender than a traditional financial institution.’”
Be Relevant to Younger Consumers
Younger consumers are affiliating themselves with major banks in record numbers, noted Raddon.
“While part of this shift is due to the perception of better technology, part seems to come also from perceived superior customer service,” said Raddon. “To combat this threat, financial institutions should focus on becoming more relevant to younger consumers. Some community institutions have found success by blending financial education with gamification, investment offerings via their mobile app, improved loan application processes and even mergers.”
Using Data Is Better Than Having Data
“There is more data at your disposal than ever before, making the need to harness it and contextualize it even more important,” pointed out Raddon. “While many institutions have built data warehouses and have data scientists and analysts to sift through the bits and bytes, the more important objective is using that data for successful accountholder interaction. The more information there is, the harder it becomes to filter out the noise.
“Institutions that can use their accountholder data to offer the right solution at the right time in the right language with the right process via the right channel will be more efficient and better able to find growth and success in this challenging environment,” it concluded.
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