Embedded Lending Will Be Key to Credit Union Loan Growth in 2025

By: Corrin Maier, Vice President of Lending Member Experience, TruStage

Today’s loan-growth leaders in the credit union industry share a common proficiency—digital integration. New research from TruStage^TM, Making Strategic Choices for Growth, reveals the strategic decisions behind the success of top-performing credit unions. Credit unions with a compound annual growth rate (CAGR) of 12.7% or higher are significantly more likely to adopt digital tools like cloud computing (60%), APIs (50%) and automated loan underwriting (27%) compared to those in the bottom third of loan growth.

Integration is a key component of the digital transformation that has driven financial services strategies for years. It focuses on connecting software, hardware and data systems to enable seamless communication between different technologies, as well as between the technologies and the humans interacting with them.

Mastering digital integration enables credit unions to meet evolving consumer demands for speed and personalization, ultimately helping credit unions remain competitive in the pursuit of member attention and loyalty.

Digital integration propels embedded lending

For lenders, digital integration is a prerequisite to embedded lending, which could be among the most needle-moving capabilities for credit unions in 2025. As consumer expectations shift, they no longer want to interrupt their buying experience to search for a loan. Instead, they expect to be offered credit at the precise moment they need it.

Non-banks are getting very good at this, leveraging consumers’ love of personalization and immediacy to diversify and grow revenue. Airlines are offering trip protection insurance as travelers book their flights; retailers are offering buy-now-pay-later options to customers during checkout; Apple Card is offering cardholders a high-yield savings account during the application process.

Embedded lending enables credit unions to compete in this space, seamlessly incorporating their loan offers and services into non-financial platforms to get offers in front of people when they are most receptive. Not only does this supercharge the volume of prospective borrowers and loan originations for a credit union, embedded lending also simplifies access to credit, potentially accelerating financial inclusion among untapped consumer segments. Credit unions get to respond quickly to consumer credit requests, engaging digitally and sometimes with instant decisions.

Competitive differentiation hinges on digital focus and a culture of agility

The loan-growth leaders studied by TruStage primarily focus on digital outreach and personalized digital experiences rather than branch engagement. This is a key reason embedded lending is a rising competency for these high-performing credit unions; it’s crucial for loan distribution.

Agility and adaptability were two additional traits shared by the loan-growth leaders. Nearly 60% of the credit unions in the top 1/3 tier of loan growth agreed with the statement, “My credit union has the ability to pivot and adapt quickly to change.”

Having a culture of agility certainly helps credit unions meet fast-shifting member demands by embracing various digital integration pursuits, including embedded lending. However, to get the most from a culture of light-on-the-feet responsiveness, credit union strategists must take intentional steps to leverage agility for measurable loan growth.

Actionable steps to advance digital integration

Integrating a credit union’s loan products into the member journey at the right moment takes a multi-pronged approach. Here are four recommended steps to accelerate digital integration and embedded lending strategies.

1. Leverage member data: Member intelligence, including payment and purchase transactions and loan application and repayment behaviors, identify key points in the member journey where embedded offers are most likely to drive loan growth.
2. Partner with your marketing leader: A key strategy of loan-growth leaders, APIs are the simplest way to achieve seamless integration, which is key to building embedded lending capabilities. However, the real driver of success is collaborating closely with your marketing leader to focus on personalized, multi-touch marketing strategies throughout the consumer loan journey. By aligning efforts, you can help ensure marketing campaigns are tailored to the unique needs and preferences of members, delivering the right messages at the right times.
3. Think beyond the loan: Integrating loan applications into the consumer journey is only one of the many possibilities of embedded lending. Credit unions can enhance the borrower experience by also embedding things like debt management education and payment protection insurance into the experience. Credit unions that offer TruStage payment protection products, for instance, use their MeridianLink Portal to provide educational content directly within the loan application.
4. Supercharge marketing: High-performing credit unions ranked digital marketing as a top three most essential capabilities. Especially when combined with dynamic content, strategic digital marketing plans may significantly boost member engagement. TruStage has found that leveraging marketing to increase member education and awareness of protection products leads to a 13% increase in loans being protected. This highlights the importance of building strong multi-channel experiences that deliver the right products and messages at the right times throughout a member’s application process to help improve product adoption rates. Strategic digital marketing plans may also help solidify trust by showing members that their credit union knows them, understands their preferences and is there when needed.

Maintaining a presence with modern borrowers

Credit unions looking to grow their loan portfolios in 2025 may do well to emulate the strategic choices of the industry’s loan-growth leaders. Prioritizing agility and adaptability, focusing on personalized digital experiences over branch engagement and pursuing digital integration strategies like embedded lending enables credit unions to be there for members, precisely at their moment of need.