alternative lendingBy Brad Powell

Are you paying attention to all the media coverage devoted to alternative lending?

It's tempting to dismiss, I'll admit. The media seems to identify an "Uber for [fill-in-the-blank]" every week, in nearly every industry. "Alternative lending" sounds as much like a buzzword as an actual factor in the financial industry.

But alternative lending is more than a buzzword. Much more. It may account for a small segment of the U.S. lending market today, but its growth is worth noting – and it offers many lessons to banks and credit unions.

What follows is the first of what I expect will be four posts on alternative lending. This post covers the basics: What exactly do people mean when they talk about alternative lending?

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line of business IT conflict
By Brad Powell

When I speak with line of business leaders at credit unions, it's not uncommon to hear them say things like, "My IT shop is really hard to work with."

And when I speak with the IT department at credit unions, I often hear them say, "You know, the line of business doesn't really understand the complexities of what we have to do."

Sometimes, I share this observation with people I meet from other industries. They almost always shake their head and say, "I know, that's how it is at our company as well."

So it's clear to me that credit unions are not alone when it comes to the perceived misalignment between the line of business and IT organizations.

The good news is that the root of the problem can be explained easily, broken down into three simple parts:

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aircraft mechanics

By Brad Powell

Banks and credit unions often ask me if they can achieve the results they need by modernizing their existing system, or will they need to throw out the old one and bring in something entirely new. So I found this article in the OnApproach blog interesting because it compared legacy systems to dinosaurs.

The piece said "legacy systems are a hindrance" for credit unions, and "keeping these dinosaurs alive is a huge resource drain."

I would propose that you can understand legacy systems better with a different analogy – instead of comparing them to prehistoric life forms, let's compare them to airplanes.

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