TransUnion: New Research Explores Technological and Data Barriers to More Automated, Inclusive Credit Union Lending
TransUnion's new research brief highlights strategies for credit unions to enhance loan growth and financial inclusion post-COVID-19. The study emphasizes the importance of trended and alternative data in improving lending practices, allowing institutions to better assess members’ financial situations. While many credit unions aim to adapt to changing dynamics and serve diverse populations, barriers such as technology adoption and costs remain significant, particularly for smaller institutions. The findings suggest that engaging underserved communities can lead to responsible growth in the current economic climate.
- Research supports the use of trended and alternative data to improve lending decisions.
- Credit unions are shifting towards more inclusive lending practices, reflecting positive change in the industry.
- The study identifies a pathway for credit unions to engage with marginalized communities, fostering responsible growth.
- Barriers exist in adopting new technologies and costs for smaller credit unions, which may hinder progress.
- Larger financial institutions are better positioned to leverage nontraditional data, potentially widening the competitive gap.
Research brief offers loan growth and inclusion strategies to navigate the pandemic economy
CHICAGO, Sept. 08, 2021 (GLOBE NEWSWIRE) -- As the credit union industry rebounds from the unique set of challenges presented by the COVID-19 pandemic, many community financial institutions are recalibrating their growth strategies with an eye toward bolstering inclusive lending efforts.
Trended and alternative data can play a key role in supporting those initiatives and a new research brief from Filene Research Institute and TransUnion (NYSE: TRU), examines how credit unions can adapt lending strategies to better compete with the evolving competitive landscape and expand financial inclusion efforts.
“Credit unions have long aimed to provide access to financial services for the communities they serve. Many of these institutions are also looking for ways to simplify lending decisions to improve the loan application process and serve a more diverse group of consumers,” said Sean Flynn, senior director of community financial institutions at TransUnion. “Gaining a better understanding of the role alternative and trended data can play in the underwriting process can enable credit unions to build a more comprehensive view of members’ financial situations while driving automation and transparency.”
These revelations were echoed by credit union executives recruited from major metropolitan areas and rural towns in regions across the United States. This market research was commissioned by TransUnion through Filene Research Institute and the interviews covered four broad topics: the current state of lending operations, new paradigms for lending, the credit union ethos, and the impact of the COVID-19 pandemic.
Key insights reinforced the notion that credit unions want to be more inclusive and take more calculated risks. The current economic environment has also driven many financial institutions to shift their underwriting models to include trended and alternative data versus legacy credit modeling, which has allowed credit unions better serve their membership's evolving needs.
Barriers exist, however, such as readily adopting new technologies and cost – particularly for smaller and mid-sized credit unions. While credit union size often correlates to the degree of automation or amount of nontraditional data in underwriting, new paradigms for assessing thin or no-file members are widely seen as desirable.
“We found in our research that the use of nontraditional credit data was widely seen as an important means of bridging the financial services gap with thin- or no-file consumers, who are often from marginalized and financially vulnerable communities,” said Dr. Taylor Nelms, senior director of research at Filene Research Institute. “There is a growing understanding in the industry that lending more deeply into the communities that credit unions serve can be a pathway to responsible growth, and the current circumstances surrounding the pandemic have prompted leaders to reimagine their credit union’s relationship to risk, and their members, moving forward.”
For more information on Filene Research Institute’s research, please download the report –Beyond Legacy Lending: Strategies for Loan Growth and Inclusion.To learn more about CreditVision Link and how alternative and trended data can benefit financial institutions, please visit: https://www.transunion.com/product/creditvision-link
About TransUnion (NYSE: TRU)
TransUnion is a global information and insights company that makes trust possible in the modern economy. We do this by providing a comprehensive picture of each person so they can be reliably and safely represented in the marketplace. As a result, businesses and consumers can transact with confidence and achieve great things. We call this Information for Good.®
A leading presence in more than 30 countries across five continents, TransUnion provides solutions that help create economic opportunity, great experiences and personal empowerment for hundreds of millions of people.
http://www.transunion.com/business
| Contact | Dave Blumberg TransUnion |
| dblumberg@transunion.com | |
| Telephone | 312-972-6646 |
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