How Banks and Credit Unions Can Succeed in Today’s Market

On June 15, 2022, the Federal Reserve raised its benchmark interest rates by 75 basis points in an effort to combat rising inflation. While these increases have been long anticipated by the industry, banks and credit unions are now bracing for the impact.

Rising interest rates affect the banking business in multiple ways. On the one hand, consumer borrowing will likely decline, hitting credit card balances and lending volumes for mortgages and auto loans. However, some are noting a rise in HELOC demand as mortgage refinances decline and borrowers capitalize on the current equity they have in their homes. Outside of lending, savings accounts, CDs and other money market products may moderately benefit depending on rate adjustments made relative to their benchmark rate.

As these effects continue to play out, what's clear is that financial institutions (FIs) over the last few years have had to quickly adapt to unprecedented disruptions-from a global pandemic to the highest rate increases since 1994. In this ever-changing environment, banks and credit unions must commit to future-proofing their organizations, using a sound technology foundation to pave the way. In particular, the right tools will allow banks and credit unions to be cost-effective, do more with less, and quickly scale their operations up and down to meet market demand and conditions. Such investments could also protect their net interest income, which banks are happy to welcome back after a decade of low rates.

Over the past few years, banks and credit unions have invested significantly in digital capabilities, yet their agreement processes often lag behind. A modern system of agreement enables FIs to lower costs, improve workforce efficiency, and accelerate time to revenue while elevating their customer and member experiences. In a survey DocuSign conducted in the summer of 2021 of 146 banks and credit unions, respondents revealed that with DocuSign eSignature alone, they on average reduced hard costs associated with paper and mailing by 40 percent, reduced the time it took to get documents out for signing by 30 percent and reduced loan processing time by 31 percent.

Agreements are at the core of several critical processes in retail banking, including account opening, lending and branch services. Below are a few ways that transforming agreement processes can drive efficiencies and cost savings in these areas for FIs.

Account opening

According to research by the Bank Administration Institute (BAI), over 55 percent of younger consumers (millennials and Gen Z) prefer to open bank accounts via digital channels. Digital account openings offer both customers and employees speed and convenience. To start, banks and credit unions should convert their paper or PDF applications to digital forms, enabling customers or members to complete and sign them without any need for printing, mailing or scanning. Additionally, an important element of new account openings is the customer identification process to meet KYC/AML compliance requirements. Banks and credit unions can streamline this verification process by embedding ID checks or capturing photo ID evidence into the e-signature flow. Through this combination of electronic signature and ID verification, FIs like M&T Bank have saved $17 per document and more than $36,000 overall.

Lending

As loan volumes decrease, now is the time for lenders to devote time to technology implementations and be ready to hit the ground running when demand rebounds. This is particularly true in the mortgage arena, where technology innovation and evolutions in the legal landscape surrounding remote online notarization have allowed many lenders to achieve their north star goal of fully digital closings. The best closing solutions will enable lenders to flexibly support both hybrid and fully digital closings and equip them with tools for secure collaboration with all closing stakeholders (for example, title agents, borrowers), remote signing and notarization, eNote creation and electronic vaulting. Leveraging the DocuSign Agreement Cloud for fully digital closings, Solarity Credit Union enhanced workforce productivity by shaving off 1.5 hours of manual effort per mortgage closing and achieving a 60 percent faster execution time for mortgage documents.

Branch services

There were a record number of branch closures in 2021, and economic headwinds will likely accelerate this trend. The implications are two-fold for banks and credit unions-they need to uplevel the physical banking experience of their remaining branch locations and lean into digital capabilities that will help them remotely reach their customers and members with value-added services.

To modernize the in-branch experience, banks and credit unions should move away from paper and enable their customers and members to e-sign documents via digital tablets. Washington State Employees Credit Union, for example, found that doing so not only delivered a better experience to their members but also helped them connect to downstream processes faster and expedite the resolution of requests or claims that brought their members into the branch in the first place.

To remotely deliver value-added services, banks and credit unions should consider innovations like remote online notarization. Many customers and members turn to their local branch to notarize important personal documents-like licenses, permits, trust documents and more. FIs can empower their customers to tap into this service remotely and even expand their reach to customers who initially may have lived too far away to visit a branch physically. Neighborhood Credit Union used DocuSign Notary to meet its member demands for this type of experience, saving 10 minutes on average per notarization. They consider Notary part and parcel of an expanding portfolio, including smart ATMs and chatbots, to reimagine the branch experience and meet their members where they are.

Though market uncertainties can be unsettling, banks and credit unions have several opportunities to build a resilient, future-ready institution that meets the realities of today. To learn more about how DocuSign can support FIs along this journey, check out our DocuSign for Financial Services page or contact [email protected].

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