There were some cliffhangers to end 2019 going into 2020 in the small dollar loan industry. From credit unions’ slow-but-steady cloud adoption strategies, fintech, and marketing automation. And who can forget the Consumer Financial Protection Bureau’s pending decision to rescind its own underwriting “ability-to-repay” requirement.
Like any forward-thinking credit union leader or executive, you have great intentions, ideas, and goals for what 2020 will bring for your members and communities. And you would be right to plan ahead; change is on the way, as 78% of financial execs believe the fundamentals of their work and how they do things will change in the next five years. We have researched a few trends we feel are important for any credit union executive to consider and plan for as we move into 2020.
- Video conferencing
The use of video conferencing allows for CUs to offer customer-focused, in-person communications technology for their community members. Regardless of a potential economic downturn, many CU leaders are often tasked with maximizing every dollar available, which means more than simply releasing new products, upgrading existing tech, or focusing on traditional sales targets. Both members and potential members may be looking for more innovative ways to conduct “face-to-face” customer interactions with their financial institutions without heading into individual branches. Video engagement enables members to directly discuss credit history, apply for a loan “in-person”, or even transfer banking documents. There are a number of innovative video platform companies available to provide CUs with secure video conferencing, a feature potential members may be looking for in this increasingly automated, high-tech, time-efficient, and competitive marketplace.
- Fintech adoption
Credit unions should be leading the pack by way of innovation in financial technology adoption. CUs are agile enough to handle this nimble and fast-moving field as well as any other financial institution. With consumer expectations taking a front seat due to the pace of innovation and competition, CUs need to be prepared to jump on a given fintech opportunity if it serves the membership well. And the target members have been in transition from one generation to the next.
Analysis by Pew Research found that in 2016 millennials, at 56 million workers, became the largest generation currently in the workforce. By that rationale, it only makes sense for fintechs to cater more towards millennials and Generation Z. With that mindset credit unions need to look for newer, more innovative ways to serve their membership. CUs need to adopt the strategy of helping millennials finance their goals and expectations resulting in increased member loyalty and, in turn, increased profits. QCash Financial’s agile white label lending platform is a perfect example in offering the automated and responsive lending products today’s customer has come to expect, while providing the speed and accessibility they need with our “6 Clicks, 60 Seconds” automated lending process.
- The road to financial wellness continues
Looking back on 2019, it’s safe to say one of the most popular buzz phrases was “financial wellness”, and for the betterment of America this “trend” must continue in 2020 and every year afterward. That oft-quoted statistic from CareerBuilder that 78% of us are living paycheck to paycheck is telling. Add to that the FINRA stat finding 61% of adults are unable to answer correctly more than three of the five questions of a survey related to financial knowledge and decision-making. A lack of financial literacy and education leads to poor choices that, over the years, has led to unfortunate long-term results.
Working our way back to financial wellness begins not only with older adults but future generations of America as well. A 2018 study by the University of Illinois at Urbana-Champaign found nearly a third of young adults 18-24, or 32%, were labeled “financially precarious” due to poor financial literacy while lacking money management skills and income stability. Only 22% were deemed to be “financially stable” while 36% were deemed “financially at-risk” because they had experienced an unexpected drop in income the prior year. Lastly, a new report from the Federal Reserve found as of Q1 2018, outstanding student debt reached $1.521 trillion. A number of financial literacy initiatives aim to help students understand the basics of financial topics and how finance can help them long-term.
A key step is getting financial literacy into high schools or even younger levels. As of 2019, only five states require high school students to take at least a half-year personal finance course as a graduation requirement. Yet there is hope. Some credit unions have already partnered with local schools to bring financial education directly into the classroom. With teachers largely unprepared to implement personal finance courses into their curriculum, designated credit union instructors can take away such burdens and offer financial literacy courses as a supplement to students’ existing education. Feel free to read our blog post featuring a Wisconsin-based CU that offers “school site” locations to students and staff that provide basic education in saving and investing.
America can still work its way out of this financial literacy crisis, and credit unions are the perfect incubators to lead the way. Our community institutions have the agility and supportive environment necessary to battle financial literacy by offering no-cost seminars and events to CU members in such notable areas as retirement planning, investment education, and debt awareness.
And just as important, they are the perfect vehicles to partner with modern-day digital and mobile solutions capable of leading members back onto the path of financial wellness. QCash Financial’s recently-released financial wellness app, a pioneering SaaS utilizing cognitive behavioral therapy to enhance financial health and habits, is the perfect complement to QCF’s mobile lending capabilities. Feel free to click here to view our QCash Financial product demo.