Opportunity Knocking for Credit Unions

FICO’s consumer research shows that millennials are more likely to switch financial institutions than other generational groups, and the perception of high fees is driving them to leave. These interviews with millennials highlights that frustration with fees.

Credit unions have recognized this opportunity and are capitalizing on the discontent. Credit union membership is growing; credit union savings balances hit one trillion in March, the first time in credit union history; and credit union loan portfolios increased 10.6% in the past 12 months, the fastest pace since 2005. (CUNA Mutual Credit Trends Report, May 2015).

Every day, credit unions are working harder to please their members. But responding to member needs, plus business and regulatory changes, requires agility. Perhaps more than current credit union service organization (CUSO) systems provide.

All too often, we here at FICO encounter credit unions using origination systems that are hampering growth and delivering a sub-optimal member experience. Those systems often limit an institution in the following ways:

• Charges to change any strategy decisions
• Weeks or months of wait time for strategy or system changes to be made
• Too many global settings and too few segment- or product-level settings

When thinking about the future, we feel credit unions can get the balance of a hosted solution, with the flexibility that business users need to easily change system parameters to respond to member, market or regulatory changes in days. An agile origination system empowers individual credit unions to:

• Implement new products or make changes to existing ones in days, not months
• Allow business users to easily modify minimum credit scores and credit criteria, and add new products or product terms
• Take advantage of pre-built reporting and easy customization to see results end-to-end
• Leverage champion/challenger testing and strategy simulations
• Connect quickly and easily to new external or internal data sources
• Employ pre-built interfaces to major credit reporting agencies
• Use role-based access controls to limit who can see and modify data

If the origination system at your credit union is not delivering in those ways, member experience may be suffering. See our recent blog post on our work with Bethpage Credit Union, or contact us for more information on how your credit union can get more agile.