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Digital transformation is key to credit unions’ lending efficiency

Jan 03, 2022

For credit unions, home and auto lending is volume driven so speed in processing is the key to maximizing profits, but that’s often not possible when they rely on old processes and technology built decades ago.

But change can be difficult, and digital transformation is a significant investment, so many have avoided embracing digital transformation. A key to better leveraging technology — and therefore ROI — is starting with a phase zero approach, that focuses on preparation and planning.    

What is a phase zero approach?

It simply means taking the time to thoughtfully consider the shifting paradigm of how we serve members and how they expect to be served. Using a phase zero approach can make the process more manageable and increase overall success.

Here are four key steps to get you started.

1. Understanding members

The first step in modernizing and streamlining the lending process is to determine how your members experience your credit union. In order to understand their journey, you first need to understand members by developing personas.

A persona is a fictitious representation of a specific segment of your members. But instead of focusing on demographics, you delve into how they think, what motivates them and why they make the decisions they make.

Your personas should answer basic questions like:

  • Why are they a member?
  • What are their financial needs and challenges?
  • What do they expect their experience to look and feel like?

Then delve deeper into what their ideal lending experience looks like.

  • Do they want to be able to complete the entire home or auto loan application and funding process from their cell phone while sitting on their couch or standing in the lobby of a car dealership?
  • Would they prefer to talk with their trusted member service representative to guide them through the process?
  • What frustrates them about the process?

Once you have identified what your members look like, you can create a member experience roadmap to identify the critical steps and potential failure points within the lending process, from pre-application to funding the loan. The following areas are typically included:

  • The initial conversation and application
    • If electronically, is the interface easy to use? Are there opportunities to talk with an advisor if needed?
    • If in person, is the conversation free from interruptions?


  • Ongoing correspondence throughout the process
    • Is the communication used —phone, email, text message — your member’s preferred method?
    • Are there easy-to-use options for providing documents and information electronically?


  • Signing documents and funding
    • Are documents signed using the member’s preferred method?
    • How are funds disbursed? Is a check required, or are there alternate options that would be more convenient?


  • Ongoing servicing and issues
    • How are service issues addressed?
    • How convenient are “blips” for your member?

Once you understand your members’ experiences, you can drive how you develop the lending process.

2. Understanding the current process

The most effective way to understand your current lending process is to create a value stream map.

Slowing down and walking through the process step by step, from start to finish, will provide the foundation. With a team representing all parts of the loan origination process, start from the beginning and document the major activities, inputs, outputs and decision points in the order they occur. This can be done on a dry erase board, on sticky notes on a tabletop or with flowcharting software.

Once the process map is created, provide a copy to everyone involved in the process to review it for accuracy. The final product is a visual representation of the current process from start to finish.  

3. Gap analysis

The next step is to identify gaps between the current process and technology, and what your members want to drive where resources should be focused and how projects are prioritized.

Each credit unions gap analysis will likely be different but there are some common process problems credit unions face to be competitive in originating loans:

  • Paper of any kind
  • Wet signatures
  • Manual input of data
  • Data input more than once

To help guide your gap analysis, the acronym CHAMPION can help you identify waste in the loan origination process: 

C Checking — Effort used to verify, review or check another’s work
H Handoffs — Increase in potential delays or mistakes every time we hand-off work
A Approval/control — Unnecessary or excessive manager/supervisor approvals
M Missing or inaccurate information — Causing the flow of the process to stop
P Prioritization/scheduling — Work being completed in an order that slows the process
I Interruptions — Reducing the time available to focus and complete tasks
O Ownership/accountability — Roles and responsibilities not being clearly defined
N Nothing happening/waiting — Causing the flow of the process to stop


Modifying or reengineering the process to eliminate waste will save resources and provide an overall better member experience. 


Leaning out the process may gain efficiencies, but if the current technology does not support the desired member experience, the changes may not create the desired results.

Technology is an investment that can support:

  • Integrated and targeted marketing
  • User-friendly member-facing interfaces for obtaining documents and signing documents
  • Workflows integrated with current LOS
  • Real-time pipeline and status reporting
  • Automated credit approval decisioning
  • Reduced reliance on human capital


There are many solutions available to leverage technology to automate the loan origination process and create the ideal member experience. Creating a digital roadmap will provide a plan for evaluating, selecting and implementing technologies to modernize the lending function. 

4. Creating a digital roadmap

The next step is using everything you’ve learned to create a digital roadmap — your master plan for digital transformation.

Leaders have traditionally thought of technology as an operational matter instead of strategic priority. But true digital transformation means it should be a part of and help drive the credit union’s strategy.

Not factoring people and processes into your roadmap could be a fatal mistake. More than 70% of digital projects fail because employees at all levels weren’t involved from the beginning to the end of projects.

Employees become frustrated when they haven’t been trained or the new technology fails to align with desired outcomes.

Externally, human-centered design — putting your members at the forefront of your decision-making — should drive your transformation.

In addition, your roadmap needs to be agile but also have a tiered plan that stretches one, three and five years into the future to ensure alignment with the credit union’s strategic objectives.  

How Wipfli can help

True digital transformation comes from combining people, process and technology. Our unique perspective at Wipfli can help bring holistic solutions that will help solve today’s problems while meeting tomorrow’s challenges. Learn more about how we can help on our financial institutions services web page.


Danielle M. Heidemann, CIA
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