Credit unions face increasing pressure to make informed, consistent and timely decisions about their members in order to remain competitive with large banks and innovative fintechs. Making more personalized member decisions at every online touch-point is critical for credit unions to retain their intimate member relationships in an increasingly digital-first world.
Member Decision Optimization is a strategic approach to centralizing and streamlining all member decisions. Using emerging decision optimization technology like Modelshop, credit unions can incorporate new data sources, leverage machine learning and ensure they can effectively meet the needs of their increasingly diverse members. More importantly, this can be achieved without dramatic changes to their existing technology infrastructure.
Current Challenges making Member Decisions
Traditional credit union decision-making processes often involve multiple platforms, rigid vendor point solutions, spreadsheets, and ad-hoc analytic tools, leading to fragmented and inconsistent member decisions. Credit unions are seeing daily challenges with their current decision frameworks, such as:
- Lack of Real-Time Decisions: By not making decisions at the point of member interaction, credit unions lose their advantage against more nimble fintechs, especially with younger generations.
- Decisions Made in Multiple Places: Different departments or teams using various tools can lead to inconsistencies, errors and waste. Critical insights get lost in the shuffle, resulting in lost opportunity.
- Integration Challenges: Updates or changes to decision strategies often become major IT projects filled with vendor delays and technical hurdles. This lack of agility leaves credit unions vulnerable.
- Poor Visibility: Without a unified view of how decisions correlate with outcomes, credit unions risk making sub-optimal decisions that can jeopardize their business performance.
For many credit unions, failing to evolve their decision making tools could mean extinction in an era dominated by fintech innovation and financial institution consolidation.
The Solution: A Decision Optimization Platform
Enter the Decision Optimization Platform – a transformative way to centralize and optimize member decisions without having to rip-and-replace your existing technology stack.
Decision optimization platforms integrate with existing technology and act as a centralized decision API, creating a hub-and-spoke model that streamlines operations while keeping individual systems simple, consistent and focused.
Key features and benefits of a decision optimization platform include:
- Integrated Member Profile: Integrate member data, credit data, deposit history and current product utilization into a cohesive profile of member performance, behaviors and needs.
- No-code Attributes: Quickly develop new member attributes, including banking cash flow features, without coding knowledge, accelerating turnaround times and responsiveness to market changes.
- Optimal Decision Strategies: Add new predictive analytics and decision logic for multiple member touchpoints, including origination, pricing, servicing, and life events, all without coding.
- Real-Time Decision APIs: Publish new decision APIs with a click and seamlessly integrate them into existing systems across marketing, origination, identity verification, customer service, and finance.
- Improve Outcomes with AI: Use machine learning to continually analyze and improve outcomes, enabling a cycle of learning and optimization that ultimately enhances member experiences.
How Decision Optimization Delivers Value
Implementing a Decision Optimization Platform can transform how credit unions engage with their members, including:
- Frictionless Experience: Delivering real-time decisions online better meets the expectations of next-generation members who seek more seamless, automated interactions.
- Consistent Decisions: Members receive uniform, instant offers across all touchpoints, from the online origination experience through customer service interactions.
- Product Agility: Quickly launch new product and pricing configurations without major technology overhauls, enabling rapid adaptation to emerging market trends.
- Reduced Costs: Centralized decision APIs reduce vendor reliance and lower operational costs. Higher levels of automated decisions reduces manual labor costs.
A Use Case: Optimizing Digital Origination
A top-10 credit union aimed to implement a digital lending portal capable of delivering interactive product selection, personalized pricing, instant approvals and real-time member onboarding. As part of this project, they struggling with the rigid product configurations, pricing restrictions and the lack of real-time counter-offers available in their existing loan origination software. The credit union was otherwise satisfied with their LOS and did not want to consider a major platform replacement to support their digital origination goals.
Below are some of the goals the credit union wanted to achieve as part of digital origination:
- Need for interactive decisions: The credit union’s vision included allowing members to see multiple instant product offers and to explore loan options in real-time while their existing LOS was designed for application submission and manual underwriting.
- Ability to access member history: The credit union wanted to incorporate historic member performance data into real-time decisions but was unable to modify its existing origination platform to include that data in a timely fashion.
- A more powerful decision engine: The risk team wanted to update their credit decision models to include additional data sources, third-party scores and custom segmentation analytics which they could not achieve using their existing LOS decision engine.
- Agility in program updates: The product team needed more flexibility in updating products and pricing logic, moving from a six-month cycle to more frequent updates, as often as weekly.
The solution for this credit union was to adopt Modelshop as their Decision Optimization Platform. Using Modelshop, they were able to connect their front-end digital origination portal directly to their centralized decision platform to enable real-time, interactive offer delivery. The same decision logic was also integrated with their existing loan origination platform to provide consistent, flexible decisions for indirect and branch applications as well as to support manual underwriting when needed.
The credit union plans to continue centralizing member decisions, including line increases and member marketing based on key life events. By centralizing member decisions through a powerful optimization platform, credit unions can not only compete with fintechs but thrive in the future of finance.
