The presence of digital commercial lending has created a mess in the financial industry. For a long time, consumers have been able to apply for a mortgage online or personal credit. However, the commercial side of lending is changing really slowly.
Nowadays, technology is available everywhere. The financial industry is beginning to implement digital commercial lending, and small business owners will benefit from it. Businesses will continue using the financial institutions they trust but will also be able to apply for a loan and get approval extremely fast with the help of online business lending software.
The digital commercial lending train is gaining speed. In case credit unions do not get on board as soon as possible and will not adopt this lending type, they will fall behind and the unions’ members will be searching for the institutions that will satisfy their fast-growing business needs.
Jim Gallagher, CEO of Lucro a CUSO, notices that small businesses need FinTech lending solutions. He says: “There are no dedicated small business people in the small credit unions. That is why the process falls on a branch manager or a consumer loan officer”. It isn’t cost-effective. That’s why the majority of small credit unions stay away from business lending.
In a larger credit union, everything goes the other way round. Such unions have business development officers. Salespeople focus on a larger dollar and more complex requests. They don’t have time for chasing and originating smaller dollar loans. For both scenarios, it’s not cost-effective.
So, How to Deal with this Problem?
Why should online business lending solutions be embraced by credit unions as fast as possible?
- There is a wide range of choices. The market is full of small business lending. A fast online search will direct a borrower to an alternative lender, or even to five of them. Your member should notice you before he or she clicks away.
- Your consumers expect it. You should explore the ways to make face-to-face lending process digital. Your consumers mostly do everything online. It’s archaic to make them fill out a long application and force them to wait for the results days or even weeks.
- Credit matters. The fact that you are taking advantage of Fintech products does not mean that your members are held to the new standards. This process is freeing your loans offers and proposes doing other things.
- It is a „sticky product”. Credit Unions that offer personal loans, credit cards, small business loans, and mortgages, will have their members for life, in case receiving these loans is a simple and fast process and matches them. The more lender can satisfy their borrowers’ needs, the more successful they will become.
- Partnerships matter. Alternative lenders are fast and the users have a good experience when turning to them. To compete with such lenders, you should choose a FinTech company to partner with and decide how you will meet the financial needs of all your customers in the future.
As a rule, members turn to their trusted credit union for their home, credit card, and auto loans. But what should they do when the same member is applying for a small business loan from your credit union? That is when fintech solutions came in handy.
As far as you see, digital commercial lending has experienced fast growth recently. However, it is hard for many credit unions to keep pace. It is high time for them to transform their operating models. In case they combine lean practices and digital technologies, they will reduce costs and reposition their business for growth.