CFE FCU Uses RouteOne Link To Keep Its Auto Lending Pedal To The Metal

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Here's a separate IT project CFE FCU is currently exploring.

The Project: telephony overhaul, including a Voice-over Internet Protocol (VoIP) system for the new corporate center and an outsourced after-hours call center

The Vendor: Looking at Siemens, Cisco, and Avia for VoIP

The Vision: "VoIP is a huge, huge project, especially with a cost of up to $700,000, so we're hiring a consultant to help."

- Kevin Dougherty, SVP-Information Systems, CFE FCU

A $1-billion credit union here reports that a new lending and credit application technology for indirect auto loans has helped it keep the accelerator down.

In January, CFE Federal Credit Union took a step that many CUs may be forced to follow, linking into the RouteOne indirect lending network in order to electronically receive and manage auto loan applications.

CFE now has the technology components that are "vital to a successful indirect program," according to Kevin Dougherty, senior vice president, Information Services, at CFE.

The RouteOne link enhanced CFE's year-old loan technologies, which included an existing connection to the DealerTrack network and the integration of the credit union's indirect lending software to the core processing system.

CFE runs on the USERS Inc. core system and the Teres Solutions, Inc. Software Application for Integrated Lending (SAIL). Teres develops indirect and direct lending solutions for financial institutions.

A Bigger Bag Of Tricks

CUs can no longer afford to interact with dealers through DealerTrack alone, Dougherty continued. "They now have to have RouteOne as part of their bag of tricks."

RouteOne is already impacting CFE's bottom line. "In just a few short months, 20% of our business is coming through RouteOne," Dougherty said.

RouteOne was formed in 2002 by four large auto finance companies, and like DealerTrack, provides a single, web-based access point for dealers and lenders to exchange credit applications and decisions.

Many of those auto finance companies are requiring their dealers to use RouteOne.

CU lenders that are lagging on automating their lending systems and connecting with the dealer-lender networks face a slow death, Dougherty continued.

"If you don't have the RouteOnes, the DealerTracks, and the SAILs, you need to go get them," he said. "The integration of the lending system and the flexibility of using both dealer networks put you ahead of the game. You're more likely to get deals because the manual process is gone.

"Before SAIL, we were manually faxing applications and approvals and rekeying the data into our core system," Dougherty explained.

The manual approach netted CFE Federal Credit Union an average of about $1.5-million per month in auto loans, Dougherty said.

"We were doing fine, but we realized we needed to integrate the pieces, from the indirect lender to the decision engine to our core processing system," he said. "Auto dealers don't want to fax the applications; they're over that. They want to type it in and shoot it out."

In addition, the solution interfaces allow CFE loan representatives to focus on booking the loan and paying the dealer, instead of rekeying data from the loan application into the loan system and then into the core system, said Dougherty.

SAIL has made loan management easier, as well. Reporting features help loan officers ensure that "dealers aren't flooding the credit union with bad paper," he said.

However, there are no guarantees. Even though CFE's indirect loan portfolio doubled to an average of about $6-million per month soon after it implemented the SAIL and DealerTrack platforms, in 2006 volumes decreased by about 45%, Dougherty said.

The drop isn't CFE's fault, really. New car and light truck sales will fall this year by about 1% from the 16.94 million units sold in 2005, according to predictions made by the National Automobile Dealers Association and the Kiplinger Forecast.

Despite the decline in auto sales, CFE's lending program is hardly on the rocks, Dougherty said.

"Whereas last year we saw the auto business driving our lending, now we're seeing more of a rounding up on the consumer side, mortgages, and indirect lending," he said. "We still have a big auto program, but we're looking for a blended approach."

CUJ Resources

For info on this story:

* CFE FCU at www.mycfe.com

* Teres Solutions at www.teressolutions.com

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