The Mobile Lending Landscape - CUNA Councils

1 The Mobile Lending Landscape : Are you ready to compete?Your Speaker Experience: 15+ years in Business Development and Strategic : Sales Management; Complex Financial Services Strategy; Card Payments and Strategy; Digital Banking; Internet Banking + Bill Pay; Mobile BankingPast Experience: PSCU; FISJ ennifer AddabboFounding Partner CU EngageTrustedAdvisorsfor the credit union industry on strategicvendor decisions that impact your members Disruptive Innovation The process by which a productor servicetakes root initially in simple applicationsat the bottom of a market then relentlessly moves up market eventually displacingestablished competitors. - Clayton Christensen Harvard Business School Professor6 Mobile MARKETS Mobile use surpassed desktop use for the first time in 2016 Consumers Have Made or Heard of Making a Payment Using a Smartphone a Purchase is the Most Common Mobile Payments Activity Across GenerationsEXPECTATIONS AND EXPERIENCESMILLENNIALCU MEMBERNON-CU MEMBERNON- with statement on a 7-point scale, with 7 being expect my financial institutions with have compelling new approaches to customer service I expect my financial institutions will have compelling new productsI recently had an interaction with a bank or CU that created both surprise and LendersHigher Approval RatingFast Growing Industry BenefitsThe alternative Lending industry consists mostly of non-bank companies that provide funding to small businesses.

2 Online Lending will be dealing in $200 billion by 2025. Alternative lenders have accepted 61-64% of small business owners looking for funding over the past 5 years (banks sit at 13-20%). Benefits of alternative lenders include less paperwork, more flexibilityand faster funding. The downside? Higher interest : Alternative Lending in 60 SecondsAlternative Loan UsersMore than half of small business loan applicationscame via Mobile devices ( ) in September 2016. In comparison, less than 40 percent of entrepreneurs were applying for funding via Mobile device a year earlier. During weekdays, 40 percent of small business credit applications online take place outside regular business hours of 9:00 and 5:00 Further, more than 20% of all small business credit applications occur during the weekend. # process is more are moving standards are more online presence can shop have more control than ever Why Are Consumers Using Alternative Lending ?

3 4. 3. 2. 1. Consumers looking to consolidate debtat more competitive market rates than their current balances Small businesses whose business size andloan amounts are considered too low for profitable banksMispriced studentswith low probabilities of default who received standardized government-issued loan rates that don t accurately assess credit worthinessRisk-adjusted consumers and SMEs that are beingdenied by their banksbased on their risk profileWhat Markets are Taking Advantage of Alternative Lending ? $ YOUR CONSUMERS SHOULD KNOWCREDIT SCORES AND INTEREST $ and Disruptive Lenders in the MarketALTERNATIVE MORTGAGE LOANS10 MNEW APPLICATIONSPER YEARThe home loan industry processes a massive number of new mortgage applications every year, and that number is ,000 PAGES PER APPLICATIONEach application can require thousands of pages of documentation and take up to 45 days to studies show that the process of buying a home can be almost as stressful as losing a close STRESSFUL Loan mother applied for a mortgage loan.

4 Was prequalified, had to resend all paperwork twice because they kept misplacing it. Paid for appraisal, was good. Got 2 email "congratulations your loan has been approved." Close set up. Few days before close loan was denied. Their excuse was she don't live in her house. Can't tell her where she lives, but she don't live in her house. My mother is early 70s, looks like age discrimination. Only reason given was she don't live in her house. BEWARE OF THIS COMPANY. DON'T POST NEGATIVE COMMENTS ON SOCIAL MEDIA, THEY WILL ERASE THEM AND BLOCK of Highland, INAfter quickly paying $500, I was told I was conditionally approved! 5 months, 8 different mortgage specialists (using that term loosely), hundreds of documents, hundreds of emails and phone calls and going to closing any day now on 6 different occasions. I was told I didn't qualify. It was the most ridiculous experience I have ever had. It's obvious there is no organization am hoping others will avoid this experience.

5 It's terrible to use such a well-known name the way they of Ponce Inlet, FLWent great in the beginning. Then they start passing you on to other employees. This is an assembly line Loan company. Was getting close to my closing date when all of a sudden the so called "Senior" loan officer jacks up my closing costs over $4,000!They were charging me almost 3 points. I guess they assumed I would proceed with the close. I dropped them immediately and contacted a local banking institution explaining my situation. They welcomed me with a lower APR % and also lower closing 'm out my Appraisal money already paid to Quicken but will save thousands in the long run by ditching them. Stay away from these sharks. Run of Summerville, SC SMART AND EFFICIENTM ortgage Intelligence helps capture a fast, and more complete application through dynamic data, document, and condition collection tailored to each borrower's unique TAY U P-TO-DATE IN REAL TIMEB rowse, edit and get updates on loan applications from anywhere, with direct integration to your AND MORE ACCURATEMake more informed and secure decisions faster with verified data from trusted financial , Mobile -responsive online application that can be completed in minutes, capturing information that drives your decisioning process.

6 After they complete their application, your member can keep in touch with you, submit their documents, collaborate with third parties, and see their loan s progress through the approval process, all without needing to hunt down a fax machine or schedule an in-person label API that allows you to customize the product for your at their fingertips first based on rate then technologyLENDERMINIMUM FICOAPRLOAN AMOUNT/MAXIMUM TERMKEY (with autopay)As low as (for excellent credit) (avg. )5% and up(max varies by state. Avg. 12%)$8,000-$100,000 /72 months$5,000-$100,000 /varies$4,000-$40,000 /72 months$10,000-$50,000 /72 months$7,000-$45,000 /72 months Available in all states except Alaska and Hawaii Online portal shows up to four offers for comparison via multiple hard-credit inquiries Available in all 50 states Offers Rate Beat program Offers $100 loan experience guarantee Available in 48 states (exceptions: Alaska and Hawaii) Capital One Auto Navigator lets you pre-qualify for financing with no impact to your credit score Know your rate and payment on over 3 million cars before visiting the dealership BBB accredited Available in 45 states and Washington, Exceptions: Hawaii, Mississippi, Nevada, North Dakota, Oregon Available in 22 states Must have a history of four or more credit accounts, such as loans or lines of credit, to traditional partners4.

7 3. 2. 1. Do you offer an API or SDK (Software Development Kit) that we can leverage?5. 6. What ongoing development support will you provide?What percentage of your solution is configuration vs. customization ?What is your 5 year technology roadmap?What third party contracts will the Credit Union need to manage vs the vendor manage?How many concurrent users is the system able to handle?Questions to Ask Potential Vendors7. What is your cybersecurity/data security strategy/commitment? $ Share and Opportunities $ $ $ $ $ $ $ of LandSharestatesRealty SharesRealty MogulLendingHome$ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ ExCAN CapitalOnDeckLendkeyDriverUpAddressable MarketAlternative Lenders$ Union Risk1 MCyberattacks targeting online Lending in 2016$10 BEstimated value of these loansAmount attacks increased between Q3 and Q4 2016150% ThreatMetrixquarterly cybercrime reportOverall channel strategyMobile Lending has to be a small part of a larger Overall Channel StrategyFirst Impressions set foundations the only thing changing faster then technology is consumer expectationsPotential first interaction is slick, then the member is dumped into your legacy online/ Mobile banking unlikely to cross sell long Processor Usual SuspectsTypically consideredIntegrated Channel Strategy Ask easy is your new member/new account process, for both members and staff?

8 Are you leveraging the data collected in this process to cross sell? Do you track lost journeys? Do you know why a new member decided to join?New Member / New AccountHow much information does your branch staff have? If a member enters a branch, does your staff have any visibility into recent interactions, such as a dispute, a new card being ordered, or mortgage application in progress?BranchAccessHave you called into your contact center? Can any MSR provide one-call resolution, with minimal hold time and no transfers? Do you know the top 10 issues, and have a plan to solve them through the web and the Mobile app?Contact CenterDoes your online banking give a complete picture of your credit union? Can a member access and use any product they would typically perform in a branch? Do your members find the experience valuable and straightforward?Online & Mobile BankingDo you have a strategy to store information from your, and your members activities, and use it to improve your service and engage better?

9 Can you understand the context your member is in from their engagement history?Actionable DataDo you simplify your payments systems so your members don t need to know the difference between a transfer, a bill pay and an ACH? Do you reward your members for using your cards? Do you track that usage and value?Payment CapabilitiesAre you providing the same (or better) access to open new products and services for your members as when they first join? How easy is it for members to add products? How easy is it for youto add new products to your portfolio?Product OpeningIs your website a true reflection of your credit union and your differentiating factors? Is it a brochure site, or does it adapt when members and prospects visit? Are you using social media to tell your story? More than just Facebook?Web presenceDo your members use your site to have a complete picture of their finances? Is PFM hidden behind a tab, or is it integrated, such as Spending History shown in Bill Pay and Goals shown on the Account Overview page?

10 Integrated PFMDo you know what causes your members to be loyal to your credit union? Do they visit you first for financial products? Do you have a true Member Loyalty Solution that rewards not just for transactions but for overall relationships?Loyalty ProductsHave you enabled technology to allow your members to self-serve when they want, and to have a trusted relationship with you when they need help? Do your staff know enough about each member relationship to act accordingly?Self ServiceDo you have a single Member Experience strategy that spans your channels? Are you able to offer the same experience for individual members regardless of the channel they visit? Even as far as paper mail matching Mobile offers?Omni ChannelIntegrated Channel Strategy Ask ConsiderationsCreate a tiered pricing structure: as volumes increase, per-app fees in flat fee per month integration cost if possible. Per web service calls can get what other third-party contracts are required and wrap all pricing and SBA renew partnership to increase loans to small businessesThe Wall Street Journalreportedthat payments companySquare planned to submit an application on Thursday for a bank charter in Utah.