Automated Lending Systems: Move beyond Efficiency

Credit Union Magazine - Doug True, FORUM Credit Union
February 12, 2007

If you believe consumer loans are a commodity, then your strategy shifts toward maximizing efficiency, right? You know, making your loan process as efficient as possible so you can enjoy a low-cost advantage. Inefficient processes are in your cross-hairs.

Well, if you're seeing what I'm seeing from my Indianapolis marketplace, it's difficult, if not impossible, to have the low-cost advantage across your entire lending product suite. Yes, you should focus on efficiency to drive down the cost it takes to acquire new loans, and you should focus on improving the member experience while getting the loan.

But too often I see credit unions focus solely on the transaction and lose sight of the member during the entire process. You might be laser-tight efficient in delivering new loans, but if you make the process confusing to your member and, most importantly, miss out on the opportunity to talk to your member, then you have missed your target.

Are privacy laws making it tougher on you to engage members in conversation? While I, personally, enjoy new privacy legislation such as the national and state-level no-call lists, these tighter privacy rules have reduced the number of conversations you have with each of your members. Compounding this situation is the use of technology by your members to acquire account and credit union information.

With this in mind, you must take advantage of each conversation with members to tell your story and communicate the value you deliver to improve their financial lives. Automated lending solutions can help you do just this. What better time to talk to members than when they want something from you: money.

When evaluating your current automated lending solution or looking for a new one, look at how you can use the solution to leverage the data elements available to you (i.e., credit bureau report, member profile) to engage members in conversations about how you can improve their debt planning. Just like many members have a trusted investment advisor, they should also have a debt advisor that helps them efficiently manage the best way to use credit.

Your automated lending solution should suggest products and services that are in members' best interest. For example, when a member applies for a new auto loan, the solution should look at the credit bureau report and member profile to see if credit union services such as a mortgage refinance, home equity debt consolidation, a better credit or debit card, Internet and bill payment use, etc., would benefit the member.

The solution should highlight what the member qualifies for and what they don't already have at the credit union so the employee can have confidence in what's being recommended, and talk to the member. Then the employee should practice what we call “100% presentment”: Present the credit union's products and services and let the member decide. To often credit union employees incorrectly assume the member won't be interested. But who knows more about the member than the member?

Automated lending solutions should make your credit union more efficient. But the real test for a solution is when you know it enables your employees to make a difference in members' lives.

Focus on the member, not just the transaction.

Doug True is senior vice president of lending and technology at $940 million-asset FORUM Credit Union, Indianapolis. He's also president of FORUM Solutions, a credit union service organization that offers TAPS® Enterprise Lending, and a member of the National Association of Credit Union Service Organizations. This story first appeared at www.creditunionmagazine.com and is reprinted with permission.