Busting the Myths Around Community Lender Digitization

It has never been more important for community lenders to be capable of meeting customers’ demands for seamless digital lending services.

April 24, 2023
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It has never been more important for community lenders to be capable of meeting customers’ demands for seamless digital lending services. Customers want to keep their banking within the community, but they also expect access to digital tools that can meet their financial needs more efficiently and effectively. 

As home equity reaches record highs, community lenders can no longer afford to rely on manual processes that take weeks to originate loans and fail to keep pace with the demand for digital services. This is why CovianceTM created Home Equity Express (HEx) – a cloud-based platform that will help lenders scale home equity volume and deliver streamlined customer experiences. HEx automates the loan process, which allows lenders and borrowers to go from clear-to-close in days, not weeks. The configurable platform uses real-time data, best-in-class vendors with pre-built integrations, and intelligent communications to deliver a fluid experience every time. 

HEx busts many of the most stubborn myths around the loan origination process and digital transformation in the credit union and banking sectors. Let’s take a look at a few of those myths and consider why it’s time for community lenders to move beyond them. 

Myth #1: Home equity loans always take weeks or even months to finalize.

Most homebuyers believe the process of getting a home equity loan will invariably take weeks – if not even longer. As HELOCs become increasingly popular (they offer a more secure source of capital than many of the alternatives, such as taking on credit card debt), the lengthy approval process creates headaches for customers and lenders alike. With HEx, community lenders and their customers can go from clear-to-close in a matter of days, not weeks.

Myth #2: Fintech solutions are difficult to implement.

The proportion of bank and credit union executives who say fintech partnerships are important to their institutions surged from 49 percent in 2019 to 89 percent in 2021. However, there’s still a common misconception that the implementation of fintech solutions is a difficult process requiring resources that many institutions lack (such as highly trained IT staff). HEx does not require coding and provides pre-built resources such as configurable automated workflows that allow community lenders to start growing immediately. 

Myth #3: Scaling home equity lending requires more staff.

Considering the digital status quo in home equity lending, it’s no surprise that many community lenders believe they will have to hire more loan officers and support staff to scale their home equity lending operations. But this is the result of antiquated assumptions about those operations, such as the idea that community lenders are stuck with time-consuming and capital-intensive manual processes. With HEx, it’s possible to scale home equity lending without adding staff. 

Myth #4: Community lenders are being left behind by bigger institutions.

At a time when many large financial institutions are consolidating, it has never been more important for community lenders to expand their services. Community lenders offer a level of personal service that enables them to stay competitive with big banks, and their members don’t have to sacrifice convenience, accessibility, or efficiency to keep their banking within the community. HEx gives community lenders powerful digital resources to compete with their larger peers and win customer loyalty. 

Myth #5: Community lenders are slow to digitize.

When most people hear the term “community banking,” they envision physical branches down the street and outdated technology. But this view doesn’t stand up to scrutiny – for example, credit union leaders are actually significantly more likely than bank executives to regard fintech partnerships as a “strong driver of growth” over the next several years. HEx demonstrates how fintechs can give community lenders access to automated and data-driven tools that will simultaneously help them scale home equity volume and deliver better customer experiences. 

Myth #6: Digitization leads to poor customer service.

Sixty-three percent of banking customers still say they want personal conversations with bank representatives – a reminder that the digital transformation of the industry hasn’t eliminated the need for human interaction. However, it’s a mistake to treat digitization and human engagement as mutually exclusive. From onboarding HEx to ongoing support, our customer success team sets us apart from everyone else - we provide superior customer service (ie. live chat with experts) with a consultative approach - most do not offer this. We become a trusted partner. Our recent ROI study also favored this at 95% of customers reporting being extremely effective/positive. By helping community lenders provide the convenience of digital processes along with their traditional commitment to personal service, HEx ensures that lending will stay local. 

Myth #7: Community lenders don’t need to offer digital services.

While community lenders should never forget the importance of personal interactions with customers, digitization is no longer optional. A recent survey found that 78 percent of American adults prefer to do their banking digitally, and this proportion will likely rise in the coming years. The key is to meet the demand for digitization and personalization – which 72 percent of consumers rate as “highly important” – at the same time. HEx offers the flexibility necessary to give customers the personalized service they want through whatever channels work best for them. 

Myth #8: Scaling increases overhead.

It makes sense to assume that scaling processes such as home equity lending will require more employees and increased operational costs. But this isn’t the case – with HEx, community lenders can drastically increase productivity (by 36 percent, according to our research) while reducing costs. This is because manual processes are cumbersome, time-consuming, and error-prone – by shifting to automated operations, community lenders will improve compliance, minimize costly mistakes, and serve customers more quickly and effectively. 

Myth #9: Fintech companies don’t have enough banking experience.

As partnerships between fintech companies and lenders become more common, it’s essential to work with software providers that understand the unique regulatory and consumer demands in the sector. The executive team at Coviance has decades of experience in the banking industry, and HEx was specifically developed to meet the needs of community lenders. 

Myth #10: Community lenders don’t have the resources they need to digitize.

This may be the most prevalent myth of all – that the digital transformation requires sprawling IT teams to handle coding, troubleshooting, and other technical challenges. HEx can be deployed and implemented in just 24 hours, and Coviance will help customers address issues in real time by providing access to experts via live chats and consultations with the client success team. HEx is a drag-and-drop solution that provides robust integrations, a single-user interface, and configurable communication workflows in one user-friendly platform. 

Community lenders have never been in greater need of digital resources to streamline their operations and remain competitive. HEx is an accessible, flexible, and powerful way to scale home equity lending and provide borrowers with the digital tools they want. This won’t just build customer loyalty – it will also help community lenders grow.

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