For decades, lending has been the cornerstone of credit union growth. But as 2025 unfolds, the industry faces two simultaneous pressures: slowing loan demand and intensifying competition for creditworthy borrowers. Credit unions must find ways to approve and fund loans faster, without compromising on prudent risk management.
The problem? Traditional lending processes often drag under their own weight; multiple touchpoints, manual verifications, and inconsistent decisioning logic create friction for members and inefficiencies for staff. And in a rate-sensitive environment, members will not wait days for an answer when fintech competitors can decision in minutes.
The Efficiency Gap
Research from Cornerstone Advisors’ What’s Going On in Banking report shows that loan application abandonment rates exceed 40% when approval or stipulation requests take longer than 24 hours. At the same time, Callahan & Associates data highlights that credit unions under $1B in assets have 20–30% higher manual review rates than larger peers, driving up cost per funded loan.
This is more than a customer experience issue…it’s a competitive disadvantage. Every hour of delay increases the risk that an applicant will seek financing elsewhere.
The Risk Dilemma
Speed alone isn’t the answer. Economic uncertainty and fluctuating delinquency rates are making risk management more critical than ever. According to Filene’s Credit Union Industry Outlook, net charge-offs are trending upward in unsecured lending, leading many institutions to tighten credit criteria.
This creates a vicious cycle: slower approvals, more manual reviews, more member frustration, and fewer funded loans.
The Data-Driven Opportunity
Leading credit unions are rethinking their approach to lending efficiency, not by cutting corners, but by making smarter, faster decisions with better data:
Integrated Data Sources: Pull verified income, employment, and tradeline data instantly to reduce manual verification steps.
Relationship-Based Decisioning: Use core data and behavioral history to safely approve deeper in the credit pool while maintaining acceptable risk levels.
Automated Stip Collection: Eliminate the back-and-forth with AI-powered follow-ups that guide members to securely submit documents in real time.
Instant Refinance Triggers: Identify loans held elsewhere and surface refinance offers dynamically, expanding growth opportunities from your existing membership.
Strategic Questions for CEOs
As you plan for 2026 and beyond, ask your team:
“How many of our loan applications require manual review - and why?”
“What percentage of applications are abandoned because we can’t decision fast enough?”
“Are we approving loans based solely on bureau data, or leveraging our relationship history to lend deeper with confidence?”
“What’s our competitive response if fintechs in our market can decision in under 60 seconds?”
“How much of our underwriting process adds real value versus creating avoidable friction for members?”
The answers to these questions may reveal that your lending process is no longer just an operational concern, it’s a strategic growth risk.
The Strategic Imperative
Loan growth may be slowing, but credit unions can still grow portfolio share by delivering faster, smarter lending experiences that members trust. The goal isn’t just to make decisions quickly, it’s to make confident decisions faster than competitors, using technology and data to close the gap between efficiency and risk management.
Credit unions that modernize their lending processes now will not only capture more loans in a competitive market but also build healthier, more profitable portfolios in the long term.