The following post is part of a series of blogs written by MeridianLink Partners who will be attending the MeridianLink LIVE! User Forum in May 2022. To learn more about the event, click here.
Credit Unions are like family for many members. They go above and beyond traditional banks to ensure their members have access to the financial services they need, with 93 percent of credit unions admitting they offer at least one service at a loss for the benefit of their members. Put simply, service means everything.
Yet, when branch managers, loan officers and IT staff are distracted daily by fraud-related issues, it can degrade the member experience, drag down service levels and dent an organization’s reputation.
With one slight change in the banking experience—shifting from manual to digital verifications—credit unions can take a big step toward further improving the member experience, and at the same time, reducing fraud. Here’s how.
Fraud Is Becoming An “Everyday” Headache
The COVID-19 pandemic forced a digital transformation that created immense opportunities for financial service providers, consumers and, unfortunately, for fraudsters. According to the Federal Trade Commission, consumers reported losing more than $5.8 billion to fraud in 2021, an explosive jump of more than 70 percent over 2020. Of the more than 2.8 million fraud reports filed by consumers in 2021, the most commonly reported category was imposter scams.
On the home front, credit unions are feeling the heat. Fraud prevention is the top priority for credit union technology investments, according to the 2021 National Association of Federally Insured Credit Unions (NAFCU) Report on Credit Unions. For many branch managers working on the front lines, fraud-related issues and investigations have become an everyday headache that strains their limited staff, technology resources and budgets, while exponentially increasing their losses.
What’s worse, in an attempt to mitigate fraud, credit unions can sometimes create friction that causes members to opt for a quicker, “path of least resistance.” For instance, why would a member go through the trouble of locating and submitting an employer paycheck stub to their credit union when they can get a near instant loan using a low-friction fintech service like buy now pay later?
Here’s one way credit unions can better serve their members and keep them engaged while battling skyrocketing surges in fraud.
Shift From Manual Verifications To Digital
Stop and think about the customer journey from a member’s perspective. There’s the first step, new account set up and onboarding. Another big step is financing, whether it’s a personal loan, an auto loan, HELOC or other product.
- Both transactions are pivotal experiences for credit union members.
- Both transactions are big targets for fraudsters, especially in today’s “faceless” digital world.
Verification of employment and income is an integral step in both processes that directly impacts the member experience and can be a dealmaker—or a dealbreaker—for both parties, depending on how the verifications are performed.
Manual verifications, where a credit union employee contacts an employer to verify a member’s employment and income, are less-than-ideal for many reasons. Since they’re often paper-based, they can add to administrative burdens and costs. Think: printing, postage, faxing and filing.
They can also drive inconsistencies. Associates may not always ask the same question(s) when speaking with employers, leading to incomplete or different results based on who’s doing the verifying. And, depending on their daily workload, they may have less time to perform verifications, which can slow down turnaround and delay loan funding.
Further, since the employer’s contact information is provided by members on their loan applications, it’s easy to falsify that information for fraudulent purposes.
Digital verifications, which are automated and integrated into the onboarding and origination processes, accelerate the member journey and close fraud gaps. They work by instantly searching a nationwide database of documented employment and income information to help credit unions:
- Boost operational efficiency and costs
- Improve verification quality and consistency
- Reduce friction caused by requesting employer paycheck stubs, etc.
- Speed up approvals throughout the member’s journey
- Minimize fraud by not relying on member-provided contact information
Case in point. Auto applicants are 40 percent more likely to be funded when their employment and income information is verified through The Work Number—a digital verification resource from Equifax®—than when their information has to be manually verified with their employer or with another third-party provider.
Far from a process overhaul, switching to digital verifications is a simple adjustment that can make a big difference in terms of improved service levels and reduced fraud. At Equifax, we’re here to support credit unions with data-driven technology, solutions and ideas that help optimize your member relationships, and your bottom line.
To explore how digital verifications can make it easier for members to do business with your credit union, or to learn more about The Work Number, contact Equifax today.