Editor’s Note: Trellance asked members of its management team to step back and share some predictions for 2018.
In all, eight Trellance thought-leaders offered their predictions. Here’s a look at what the first four had to say, as well as the implications they see for the credit union community, with the second four to be featured later this week. (Note: This blog first appeared on Trellance.com.)
Mike Chenderlin, Senior Portfolio Consultant
To say fraud will increase is not even a small stretch as far as predictions. But 2018 will bring much more complex and evolved forms of fraud to credit unions, in the form of account take-overs, false account openings and synthetic fraud–all ways in which criminals can make money, but which existing fraud detection systems won’t notice.
The existence of all the breached Equifax profiles on the dark web just makes this that much easier for fraudsters to open an account, obtain a credit card and a loan, and walk away with the proceeds, leaving the credit union with the liability.
Implications for Credit Unions: Many credit unions are dipping their toes into the online and mobile loan origination waters, which is the preferred method for fraudsters to commit crimes remotely. Additional scrutiny needs to be placed on new members and new loans acquired through online channels.
Dave Chojnacki, Senior Portfolio Consultant
We will see an increase of AI technology in consumer lending, customer (member) interaction/retention, payments and fraud detection. Lending is a big data complexity and it makes sense to increase the use of AI in this space. In having larger amounts of data in an AI environment it helps to forecast the overall credit worthiness.
AI can be used to take the decision beyond credit scores, income, car and home values, to include inflation and economic growth predictions to help gauge credit worthiness. For improved member experience AI can pull on a wider variety of data than previously used to refine segments further and offer services based on detailed needs.
AI will continue to evolve from the current chatbot interaction to include upselling by digging through larger amounts of data. AI will continue to evolve from the current landscape in providing more on the spot fraud deterrent solutions as e-commerce transactions continue to increase.
Implications for credit unions: While there are challenges to implementing AI, including access to data, need for expertise, not to mention needed investment, AI will become a must-have in the ever-changing market. Credit unions need to make AI a part of their strategy to continue competing in the payments and lending space.
Ann Farrell, Optimize Portfolio Consultant
Targeting millennials will begin to pay off. For years, the stereotype of millennials has been single people living in their parents’ basement, spending all their paycheck on avocado toast. But with the current robust economy and near full employment, millennials are at the age where they have achieved career-type jobs, getting married and buying houses.
Credit unions who made a concerted effort to reach those millennials in the early years where their earnings were meager now have existing members who are now eligible for relevant products like mortgage programs, car loans and credit cards.
Implications for credit unions: Creating targeted marketing to members who have had a credit card for a few years to offer credit line increases, and creating promotions for first mortgages that appeal to the 20-30-year-old new families will result in increased revenue, and happier members.
Michele Featherstone, Senior Portfolio Consultant
The gig economy will encourage new banking products geared towards helping workers whose income can swing greatly from month to month, or even week to week. Car payments with variable amounts, short term loans built into checking accounts, flexible credit card payment dates, app based retirement savings plans for contract employees, and other new products will be adopted by the growing number of contract workers.
Implications for credit unions: Credit unions that want to be a part of this growing new economy need to offer increased flexibility in product offerings.