Alliant Credit Union, one of the nation’s largest CUs, is fully digitalizing its end-to-end member application and loan process by yearend, moving closer to becoming the nation’s first digital-only credit union.

Right now, the Chicago-based Alliant allows people to apply for membership or loans online via desktop computers, phoning into its call centers or by mailing their applications to a physical office, Heather Lally, Alliant Vice President of Operations, told Bank Innovation. 

“But we are becoming more digitally oriented. We’ve never been a branch-centric credit union,” she told Bank Innovation. “We are entirely cashless, meaning we do not accept cash nor do we transact with customers in cash.” 

The credit union currently has only two branches and is migrating almost all its offerings to a digital front. In 2018, Alliant’s tech team built a new consumer lending platform “completely in-house,” from the ground up, Jason Osterhage, senior vice president of lending at Alliant, told Bank Innovation.

The team also “totally automated” the backend of all membership application processing, Lally said.

Both projects were large undertakings, especially for a credit union, which is typically more constrained than a similar-sized bank from budget and compliance perspectives, Osterhage explained. This, he said, is because CUs are structured as non-profit organizations in which customers are shareholders.

While neither Osterhage or Lally disclosed the costs of these projects, Bank Innovation previously reported Alliant allocated 15% of its 2018 spend budget for technology, almost twice as much as other credit unions the same size. That technology spend, Bank Innovation reported, was about $22.5 million a year, based on an annual expense amount of $150 million in 2018.

“Now, for 2019, the goal is to revamp the consumer-facing side of things like allowing them to apply to be a member end-to-end on their mobile phones,” Lally said.

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Aside from its two Illinois-based branches, Alliant doesn’t have any other physical presence, making it a prime candidate for becoming purely digital. And while digital-only standalone FIs are gaining popularity among traditional banks, like JPMorgan Chase with Finn and Goldman Sachs with Marcus, the trend has not spilled over to the credit union space as rapidly. Nevertheless, the digitalization of the overall financial services ecosystem is inevitable, Jason Grohotolski, VP-senior credit officer Moody’s Investors Service, told Bank Innovation. Therefore, it “pays to be an early adopter, Grohotolski said.

The main benefit of being an earlier adopter, he explained, is “the customer service component that’s established to accommodate a digital platform.” Grohotolski pointed to Ally Financial as an example.

“They were one of the first to build a purely-online platform,” he said. “This means their customer service is built around that type of platform. It is nimble, seamless and doesn’t need to be reconstructed to adapt to a new digital offering.”

Similarly, Alliant Credit Union has mature customer service, Lally said. “Before digital banking became a thing, we always emphasized a type of remote-banking, our customers have historically transacted with us through phones rather than coming into our branches. Even when we had 15 branches in the Illinois area, we weren’t focused on branches as the main point of customer banking.”

Based in Chicago, Alliant Credit Union has $10 billion in assets, making it the largest credit union in Illinois and among the top ten largest CUs of the country. It currently has 400,000 members.

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