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The Financial Ecosystem Model for End-to-End Lending

Underwater ecosystem scene with coral reef and fish
By Omar Jordan

4 minutes

Why your leaders should pay attention to it

It’s a rare, but fortunate, occasion to discover an opportunity within your industry to diversify your offerings and grow your business. Financial industry analysts are describing that opportunity for credit unions and other lenders as “becoming a financial ecosystem.” 

A good example of a financial ecosystem can be found in the home-buying arena. Until recently, no single business offered a complete home-buying ecosystem, but that’s precisely what Zillow appears to be closing in on. In a very short period, the digital home-selling marketplace expanded by adding a home-buying program and a mortgage lending capability. It’s easy to see the future Zillow has envisioned. The company clearly seeks to connect buyers to sellers and lenders to borrowers, solving every problem confronted during a real estate transaction. In other words, they have designs on becoming a complete, end-to-end home transaction ecosystem.

The buyers, sellers, lenders and borrowers that engage with Zillow are called “ecosystem drivers,” and they stand to benefit equally from a strong, all-inclusive marketplace for home transactions. 

While your credit union may not have the resources to build an ecosystem all its own, it may very well be poised to play an important role in one.

What’s Driving the Ecosystem Model Within Lending
Without a doubt, mortgage lending is entering a new phase of digitization. As nearly every step of the process moves out of the paper world and into the electronic realm, borrowers become less tolerant of the former. They expect more to happen, sooner, and want easy-to-access updates every step of the way.

Lending ecosystems not only make the mortgage approval process fast; they make it better aligned with shifting borrower expectations.

The Credit Union Opportunity Is in Platforms, not Products
Credit unions can tap into this future state of financial services now, beginning with mortgages and moving eventually into countless other financial transactions. Operational efficiencies will be one of two keys to delivering a new kind of experience; a change in mindset is the other. 

Your best bet? Embrace the concept of the financial ecosystem by partnering with vendors that offer platforms rather than products. Platforms create value by facilitating exchanges between two or more groups. Airbnb, for example, is a platform that connects people who have a place to stay with people who need a place to stay. 

The platform model is not necessarily new (e.g. farming cooperatives connected growers with buyers). It’s the digital part of today’s platforms that’s facilitating sweeping changes. Becoming familiar with the digital platform model through partnerships allows your credit union staff to more easily envision the organization’s place in a larger ecosystem, financial or otherwise.

What to Look for in a Platform Partner
The best platform providers are focused less on technology and more on enhancing the end-user experience. So, as your team members search for platform providers, encourage them to choose technology capable of solving real problems for members. While they are sure to encounter marketing hype that promises the most advanced technological solutions on the planet, the real meat to the sales pitch is found in a provider’s consumer-centricity. 

Vendors that provide one access point to multiple products or services are growing in number and scalability, yet the lending department is a great place to explore the possibilities. With access to platform services, loan officers are connected to the myriad providers it takes to approve, underwrite and close a loan. As a result, staff can spend more time with members, offering both the high-touch service for which credit unions are known and the streamlined experiences hyped by digital competitors.

Here are a few questions to ask when shopping for platform partners:

•    How is the member kept at the front of every transaction?
•    Are the technologies backing up the platform continually improving?
•    How do you find creative solutions when you come up against technology limitations?
•    Does your system allow the member to have constant access to his or her information?

As with any ecosystem, the potential for break-down exists when any part of the system fails to meet expectations. However, neglecting to explore the growing number of digital financial platforms is a greater worry; competitors are already on this fast-moving train. Any platform your credit union implements should be a step ahead of the game, closing the gap between what members want today and what they’ll need tomorrow. 

Omar Jordan is CEO of fintech CUSO LenderClose, West Des Moines, Iowa. With API connections to every vendor it takes to originate a mortgage or HELOC, LenderClose gives loan officers immediate access to a comprehensive suite of reports and services—from credit scores and flood determinations to notary signing and county recorder services. The result is a streamlined and vastly accelerated underwriting process.

Read more about credit unions’ relationships with fintechs in “The New Financial Ecosystem.”

Learn more about CUES School of Lending™ and CUES School of Member Experience™.
 

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