Interest rates alone will no longer guarantee loan portfolio growth.
Sponsored by Finastra
Fintech software has created some amazing features and benefits for credit unions seeking to grow their lending businesses. But this same technology has opened doors for non-traditional financial services providers to compete for your members' business in a shrinking lending market.
It’s true your credit union has a tremendous advantage by providing aggressive interest rates for members seeking new products and services, but is that enough to stay relevant to existing members and attractive enough to entice new members?
Interest rates alone will no longer guarantee loan portfolio growth. Enabling a better user experience through all stages of the lending process using technology is equally as important as competitive interest rates. Creating a digital presence within the lending marketplace is required to maintain a competitive advantage.
E-signature as a First Step to Digital Transformation
One way credit unions can leverage digital channels quickly is to implement an electronic signature solution. Providing a faster, more convenient way for members to sign loan documents from any device at any time and place is becoming a standard business process. Understanding state (Uniform Electronic Transactions Act) and federal (Electronic Signatures in Global and National Commerce Act) regulations regarding e-signature will help build a competitive advantage for your credit union and ensure your processes will stand up in a court of law.
E-signature adoption in financial services has seen an almost 40 percent increase in the past year based on the need for credit unions and other financial institutions to meet the growing expectations of their members—members who are increasingly tech-savvy, according to Finastra’s internal client research and e-signature webinar, Trends and Drivers for Implementing an eSignature Solution. It’s also a simpler technology for IT teams to implement and support when compared to other enterprise technology systems.
Best Practices for E-signatures and Delivery
Here are a few guidelines to get started in the right way and ensure success with this technology. Learn more in Finastra’s white paper, Best Practices for Electronic Signatures and Delivery.
1. Start with an in-branch signing ceremony.
For the initial implementation and launch of e-signature technology, it’s best to start small and grow from there. An in-branch signing ceremony, which involves testing the technology with stakeholders in the organization in order to gather accurate and complete requirements, can provide the first stepping stone for your credit union.
You, your employees and your members will quickly notice the benefits of streamlining the loan-signing process, including cost- and time-savings. Like any new technology implementation, getting everyone up to speed may take some time, but news of the benefits will spread quickly, and staff will soon ask for ways to increase adoption across your credit union and into other processes.
2. Simplify and standardize processes.
It’s also a good practice to limit the initial rollout to simple or standardized workflows that are not overly complicated and have fewer steps. For example, delving into current departmental processes will reveal which roles handle which document types, and what levels of authorization are appropriate for each role. This allows you to build the in-branch launch with some simple processes to increase your effectiveness and success. This can be accomplished through departmental meetings to assign roles and responsibilities based on appropriate authorization of e-signature usage by job function. For example, a loan officer may have signature authority for loans up to a certain amount. Beyond a certain amount they may need to go to the CFO for signature. Workflows can be captured and documented to automate the approval process and help streamline the overall loan process.
3. Develop effective use policies.
Developing effective use policies for your credit union is another way to drive standardization and best practices for e-signature and delivery, keeping in mind the various laws, regulations and organizational requirements that guide its use. As a general rule, successful policies are objective, define terms, summarize content and formally share information within the credit union. Creating a master signature policy with a subsection for e-signature outlining specific authorizations and limitations can provide strong accountability and measurable results for e-signature implementation and use.
If your credit union is in the midst of, or planning, digital transformation, e-signatures should be near the top of your priority list.
Michael Haedrich is the senior product manager for eSignature solutions for lending at Finastra, Lake Mary, Florida. Michael joined Finastra in 2018, bringing more than 20 years of experience in innovation and technology. For more information on this topic, watch Finastra’s complimentary on-demand webinar, “Trends and Drivers for Implementing an eSignature Solution.”