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Facing Alternative Lenders Head-On: Three Simple Steps to Disrupt the Disruptors

May 27, 2015

Every industry faces competition and potential disruption. For community banks and credit unions, the competitive situation is heating up, especially in lending. Consolidation has empowered many players with greater reach, deeper wallets and new tactics to win over your customers or members. Now, many of your competitors plan to capitalize on the rise in consumer, mortgage and business lending demands. You’re also encountering a new breed of competitor – alternative lenders. And they plan to do more than compete. They aim to disrupt the market. How should you address this onslaught from competitors and disruptors?

Start with a mindset shift. As a tech industry veteran, I’m well-accustomed to market disruptors. Tech companies constantly witness new companies that emerge not just with competing solutions, but with alternative solutions that completely replace what was the “norm”. Technology leaders are paranoid about competitors and disruptors. But disruption is a relatively new phenomena in the Financial Services market. And that makes it a greater risk. Think about the impact Uber had on the seemingly stale taxi market, all because no one was paying attention. Financial institutions can’t be complacent about disruptors. If any lesson can be learned from the tech industry, it’s that you must acknowledge, prepare and go after these disruptors head-on. You have a unique quality that alternative lenders simply can’t replicate overnight – the trust of your customers or members. But that’s not enough to win. You need to develop a mindset towards innovation, constantly looking for relevant ways to change or disrupt your own strategies, operations and processes.

Address growing customer or member requirements like small business lending: There’s no one better suited to serve the need of small businesses than community banks and credit unions. Expanding into small business lending can increase profitability, expand member wallet share and minimize the impact of market fluctuations. Whether customers or members come to you for a loan to open a new retail shop, launch an online business or buy an existing business, you must quickly and efficiently address their needs to be a viable source for the growing demand for business loans. Knowing what to offer and how to build a plan for introducing business lending services is half the battle. Learn how organizations like Southport Bank, CoastHills Credit Union and Beacon Credit Union address member and customer business needs, including SBA loans, agricultural loans and more – today.

Embrace online direct lending, but differentiate by delivering a seamless borrower experience across every channel. Consumers demand online and mobile options to search and apply for mortgages. Interest continues to increase, with borrowers like Millennials turning this option from a “nice to have” to a “must have”. Alternative lenders are seizing this opportunity. You can too. Community banks and credit unions like Bank Mutual, INOVA Federal Credit Union and Advantis Credit Union already use consumer direct solutions to enable borrowers to apply for a mortgage and secure approval in as little as 15 minutes through their website, generating live pricing, detailed city-level fees and real-time loan status in an instant. By integrating your online direct applications with other points-of-sale, borrowers can complete an application in one channel, or begin in one channel and finish in another, without losing data. Coupling a seamless borrower experience with the long standing trust of your customers and members, and unique services like the new mortgage payment protection offering from CUNA Mutual, will create significant service differentiation for your organization.

Author

Lindsay Sanchez
Vice President, U.S. Marketing at D+H

Lindsay Sanchez is an executive leader with 15 years of experience developing, planning and executing go-to-market strategies for multi-billion dollar high-tech companies. At D+H, Lindsay runs the U.S. marketing organization, including product marketing, client advocacy, integrated marketing, business development and analytics. Prior to joining D+H, Lindsay spent nine years at the software giant Citrix in a variety of product and solutions marketing leadership roles. She holds a BA from Middlebury College in Vermont.

Lindsay Sanchez