Improving credit union lending through member-facing automation

Customizable portals combined with Lending Systems (LOS) capabilities can help improve experiences and gain market share.

Although banks and captive finance companies continue to dominate auto lending, credit unions are finding opportunities to increase their market share. A recent Auto Finance News The article noted that credit unions are gaining traction in longer-term lending, capturing 49% of new vehicle loans with terms of 84 months or longer, representing growth of 37%. compared to the second quarter compared to the previous year.

This trajectory is likely to continue in an uncertain economy, since credit unions are generally able to offer lower rates than the big banks. As these opportunities continue to grow, credit unions stand to benefit significantly from using customizable and sophisticated auto lending solutions in more than one context. These solutions have advantages for both direct sales and indirect reservations via DealerTrack, RouteOne or other portals.

Take advantage of relationships, low rates and long terms

Credit unions have the opportunity to leverage their current member relationships to win more business, by encouraging applicants to easily finance – or more likely refinance – vehicles on the lender’s website. A direct request portal integrated into a credit union’s website can be a powerful tool in this regard, giving the customer the ability to choose the financial package they want, removing confusion, improving customer satisfaction and speeding up the process. entire loan process.

When working through indirect channels, credit unions can take advantage of their competitive advantages of lower rates and longer terms. A sophisticated, automated solution can streamline arduous workflows that have frustrated lenders, dealers, and consumers. New features like Alternate Data Sourcing and Fraud Mitigation help lenders validate applicants, make better decisions, and make those decisions faster. These efficiencies benefit all parties — credit union, channel and consumer.

We have seen automation produce extraordinary success in the field. Example: A large credit union had been providing indirect lending exclusively for nearly 30 years. UC made the decision to implement a feature-rich member portal, adding direct sales to its traditional indirect model. In just over two years, this credit union has roughly doubled its overall auto loan volume. The credit union’s direct lending revenue now exceeds that of its indirect lending. To top it off, CU also received an award for its superior digital customer experience, which certainly adds to its brand proposition.

Credit unions typically maintain long-term relationships with their members through products such as savings and checking accounts, mortgages, and revolving lines of credit. This history allows CUs to suggest additional products – like car loans – as a natural extension of their existing relationship. And long-term members may have lower risk than new customers who only buy car loans. Adding an auto finance or direct loan refi option can give a credit union the opportunity to both expand a profitable line of business and create greater consumer bonding.

Abilities that level the playing field

Credit unions typically don’t have the same level of budget or access to internal IT resources as larger banks in areas such as fraud mitigation, automated decision-making, or advanced analytics. But modern cloud-based loan origination solutions solve this problem by integrating best-in-class third-party features and capabilities directly into the LOS platform. This approach gives credit unions access to an ecosystem of high-value services that reduce risk, speed up workflows and, most importantly, help lenders close deals, without the associated costs and headaches. the purchase and integration of software into the existing infrastructure.

Credit unions can also better leverage concepts like AI-based models and real-time triggers or alerts. Advanced consumer portals and LOS systems can support a host of third-party services that will immediately benefit credit unions. For instance, Arise from, Jericho Information Technology and predictive point are the best providers whose solutions can improve credit decision models.

As credit unions continue to seek opportunities to strengthen their membership base and expand their auto finance portfolios, member portals integrated into an LOS can generate new revenue and brand loyalty in a rapidly changing market and highly competitive.

Sam Heath is the Chief Revenue Officer of Inovatec systems. Inovatec provides LOS, LMS, and direct systems that aim to eliminate friction in the loan process and automate much of the manual work of loan origination and management.

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