Lending strategies have been predictable and overly conservative for quite some time. They follow a regimented method and appear linear at best with little to no risk.

What if it is time to become less linear and more dynamic? This may be your bank or credit union’s moment to shine, break free of conservative policies and strategies and say ‘yes’ to more dynamic ways of lending.

A CU Broadcast episode featuring Sean Flynn, senior director of community financial institutions at Transunion, revealed the need for banks and credit unions to adapt and be more flexible in their lending strategies to better compete in an increasingly competitive landscape and expand their financial inclusion efforts.

If your institution currently has an A+ or A lending portfolio, are you taking the necessary risks to grow and diversify your portfolio and truly serve consumers? Or are you playing it too safe?

One type of loan that is trending right now is the buy-now-pay-later consumer loan, frequently found in car buying but also in other areas. In a Credit Union Times report about lending trends, Buy-Now-Pay-Later loans have evolved from the appliance store to include indirect car lending at dealerships and financing for solar panels or other home improvements sold by contractors.

So, what does a buy-now-pay-later consumer want? We live in a world of instant gratification. If your loan process is tedious, time consuming, and outdated, consumers will choose a loan from the retailer who is offering 0% interest for a designated period of time, or maybe no payments until the new year. These consumers are researching online to find a washer or dryer, a used car or materials for a home improvement project. They are likely already a member of a credit union or a customer at your bank, and more importantly are in the market for a loan. This is where your financial institution can simplify the process and rely on partners to provide technological advances that help mitigate the risk involved in expanding your loan portfolio.

According to Credit Union Times, new car loans accounted for 11% of credit union portfolios in July, while used cars accounted for 21%. New car loans fell 2.1% in the 12 months ending July 31, while used car loans were up 6.4%. Relying on partnerships, like Open Lending’s Lenders Protection platform which streamlines and creates safety and soundness around nonprime auto lending, will help simplify the lending process. Here is where our loan analytics, risk-based pricing, risk modeling, and automated decision technology for automotive lenders can serve your financial institution well.

We provide automated auto loan services to financial institutions, as well as default insurance coverage for auto loans. Let us help your bank or credit union adapt and break free from the line by saying ‘yes’ to more auto loans.