Conflict Avoidance Conundrum Unnecessarily Heated
In a recent experience, a buyer found the loan process for financing a travel trailer to be more cumbersome than anticipated. The process, which included multiple rounds of paperwork, numerous phone calls, and visits to the branch, was considered excessive.
Despite requesting to draw from their existing checking account, the buyer was asked to visit the branch to set this up. The loan officer suggested opening a checking account at the lending institution and setting up direct debit from there. However, a packet of payment coupons arrived in the mail, despite filling out the direct-debit form.
The loan process also involved testy and sarcastic interactions due to its unfolding. The buyer, who works for a firm that advises financial institutions on avoiding issues similar to those experienced, found the process unappealing. As a result, they are unlikely to recommend the institution to a friend and certain to look elsewhere for future loans.
However, the loan for the travel trailer was financed with the most attractive offer coming from a credit union where the buyer lives. The RV purchase paperwork is more like a car loan than a home mortgage. The buyer purchased a lightweight, 16-foot model named Tony Roamo.
The loan experience could have been a coveted opportunity for the credit union to establish an ongoing relationship, make a profit, and serve the community. By adopting integrated, real-time digital payment platforms, credit unions can streamline the direct debit process for loan payments and improve customer experience.
Key methods include using automated ACH file processing systems, implementing real-time payment capabilities, offering frictionless, multi-channel payment options, integrating loan payment processing directly with core and digital banking systems, automating reconciliation and workflows, and providing mobile-friendly features.
By combining these approaches, credit unions can reduce friction in the direct debit and loan payment process, create smoother member journeys, improve timely payment rates, and strengthen member relationships through ongoing engagement opportunities alongside payment transactions.
In light of this, credit unions risk disintermediation by lenders that specialize in quick and frictionless processes. It is essential for credit unions to modernize loan payments and enhance customer experience to remain competitive and continue serving their communities effectively.
[1] Millennium Corporate Credit Union: coreCONNECT-ACH [2] CU Water Cooler: Frictionless Payments for Credit Unions [3] CU Insight: Automating Loan Payments for Credit Unions [4] NACUSO: Mobile Banking for Credit Unions [5] CU Times: Streamlining Loan Payments for Credit Unions
- The buyer, having worked for a firm that advises financial institutions, realized the importance of a smooth and efficient loan process in personal-finance and business matters.
- To remain competitive and provide better service to their communities, credit unions, such as the one where the buyer lives, should modernize their loan payment processes using integrated, real-time digital platforms, as suggested by resources like coreCONNECT-ACH, CU Water Cooler, CU Insight, NACUSO, and CU Times.
