For decades, lending has been the cornerstone of credit union growth. But as 2025 unfolds, the industry faces two simultaneous pressures:
Slowing loan demand
Intensifying competition for creditworthy borrowers
To stay competitive, credit unions must approve and fund loans faster—without compromising prudent risk management.
The challenge? 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 won’t wait days for an answer when fintech competitors can decision in minutes.
The Efficiency Gap
The numbers tell the story:
Loan application abandonment rates exceed 40% when approvals or stipulations take longer than 24 hours (Cornerstone Advisors).
Credit unions under $1B in assets have 20–30% higher manual review rates than larger peers, driving up cost per funded loan (Callahan & Associates).
This isn’t just a customer experience problem. It’s a competitive disadvantage. Every hour of delay increases the risk that an applicant will take their financing elsewhere.
The Risk Dilemma
Of course, speed alone isn’t enough. Economic uncertainty and rising delinquency rates are making risk management more critical than ever.
Net charge-offs in unsecured lending are trending upward, pushing many credit unions to tighten credit criteria (Filene).
The result? Slower approvals, more manual reviews, more member frustration—and ultimately, fewer funded loans.
Credit unions must balance the need for speed with the discipline of sound underwriting.
The Data-Driven Opportunity
Leading institutions aren’t cutting corners to gain speed. They’re modernizing lending efficiency by using smarter data and automation:
Integrated Data Sources: Pull verified income, employment, and tradeline data instantly to reduce manual steps.
Relationship-Based Decisioning: Use core and behavioral data to approve deeper into the credit pool while maintaining acceptable risk.
Automated Stip Collection: Deploy AI-powered follow-ups that guide members to securely upload documents in real time.
Instant Refinance Triggers: Identify loans held elsewhere and surface refinance offers dynamically to grow share within your existing membership.
These approaches close the gap between fast decisioning and safe decisioning.
Strategic Questions for 2026 Planning
As you prepare for 2026, ask your leadership 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 are we leveraging 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 may reveal that lending efficiency is no longer just an operational concern—it’s a strategic growth risk.
The Strategic Imperative
Loan demand 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. By modernizing processes with technology and data, credit unions can balance efficiency with risk, reduce abandonment, and build healthier, more profitable portfolios for the long term.
Continue the 2026 Strategy Blog Series
This article is Part 5 of our series: The Priorities That Matter Most: Credit Union Strategy for 2026.
➡️ Intro: 2026 Strategy Starts Here: What Winning Credit Unions Know That Others Don’t
➡️ Part 1: Financial Health Is Not a Nice-to-Have, It’s a Strategic Imperative
➡️ Part 2: Channel Strategies: Bridging Branch and Digital for Seamless Member Experience
➡️ Part 3: Serving Younger Demographics: Building the Future Membership
➡️ Part 4: Deposit Growth Is Not a Rate Game Anymore
➡️ Part 5: Lending Efficiency and Risk: Balancing Speed and Sound Decisions (you're here)
➡️ Part 6: Becoming the Primary Financial Institution: The Path to Deeper Member Value
➡️ Part 7: Innovations in Collections: Enhancing Member Experience
Stay tuned. Each post explores a critical strategic lever that can help your credit union grow with confidence in 2026.
Want the Complete Playbook?
📘 Download the 2026 Credit Union Strategy eBook for the full set of insights, best practices, and actionable frameworks to align your leadership team and build sustainable growth in the year ahead.
