Colorado Credit Unions, oFlows Team To Build, Boost Lending

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SAN DIEGO-oFlows is reporting it has been able to help several credit unions improve their loan origination an cross-sales numbers.

As previously reported in Credit Union Journal [Colorado CUs, Firm Pilot New Loan Shopping Tool:, March 15, 2010] oFlows partnered with the Credit Union Association of Colorado on, which gives potential members the opportunity to find competitive lending products from CUs in the Denver metropolitan area.

Scott Pitts, CEO of oFlows, said the paperless origination system the company developed for the former USA Federal (which has since been absorbed via merger by Navy Federal) and others can be accessed by consumers from a variety of sources-such as from a CU's website, a banner ad on the Internet, keyword searches or even other oFlows endeavors.

"When people go to CULoanZone they can pick which credit union they can join, and once they've chosen one, they can click 'Apply Now' and go to the paperless origination system," he said.

The No. 1 reason why people drop out of the online loan application process, Pitts said, is eventually they hit a step that requires them to mail a hard copy or visit a branch. "The competition literally is one click away. Ours is a completely online process."

oFlows consists of the same team that put together peer-to-peer lending operation Zopa in the United States, Pitts explained. He said he and his colleagues started Zopa and worked with a national network of credit unions to implement it, but when the credit crisis hit, the investors pulled out.

"So we called our credit union partners, who told us what they really wanted was our paperless origination system," he recalled. "That's when the light bulb appeared over our heads and we began building oFlows, which is short for origination workflows."

Pitts said oFlows worked with the former USA Federal to create a completely paperless, end-to-end origination system that addressed the "real points of pain and real needs" credit unions experience every day.

Listening To Compliance, Origination Staff
"We think of (USA Federal/Navy Federal) as one of our key partners in getting the system right the first time," he said. "We sat with the compliance people and the originators to hear their concerns, and we do that with other credit unions as well."

oFlows currently has five other credit union clients for its paperless origination technology: Denver Community CU, Red Rocks CU and Horizons North CU, all in the greater Denver area, BCS Community CU in Wheat Ridge, Colo., and Self Help CU in North Carolina. Recently, oFlows added to its client roster Arkansas-based First Southern Bank and Emerge, a payday loan alternative offered through credit unions and community banks.

"We are particularly proud of BCS Community Credit Union," Pitts declared. "It is a $12 million credit union, so very tiny. We met with them, and because our system is a software-as-a-service platform, there is no need to have an IT staff on hand to manage the system-it only needs a browser. What is cool about that is this tiny credit union in an old Victorian house in Wheat Ridge has better loan origination technology than Bank of America. We are implementing a real-time connector to [its] core banking system, so everything automatically goes in without rekeying."

In contrast to BCS Community CU, Pitts continued, USA Fed is a large, sophisticated credit union-but it is using the same system as a one-employee credit union.

"It is really neat to see that technology working," he assessed.

Savings & Cross-Sales
USA Fed has been using oFlows' paperless system for more than eight months, which has allowed the company to run case studies. Pitts said he has a calculator that compiles how many pieces of paper and mail are generated-plus person hours worked-by the manual loan process and compares it to the oFlows system to demonstrate how much it has saved.

"The numbers are significant, and some of our other clients are seeing the same thing," he asserted. "The bigger they are the more they save, but even a mid-sized credit union can save $10,000 per month from Day One."

Saving On Toner
Kelly Costa, AVP of operations for what was formerly USA Fed, said since it went live with oFlows it has not had to print any supporting documents to loans, such as drivers' licenses or pay stubs. "We get everything into our records system as a digital image," she said. "It can save as much as two weeks from having to physically find and scan in the documents."

Carolyn James, the credit union's chief information officer, said she has not gone back and calculated an exact cost savings for switching to the paperless origination system, but compared the experience to a MasterCard "Priceless" commercial.

"If the member is talking with one rep, hangs up, then calls right back to ask another question, the next rep can help because the documents are in the system. That's priceless," she said.

CULoanZone is just one example of how credit unions can leverage a paperless, online origination process, Pitts said. Some of oFlows' clients are using Google keyword searches, but they were losing people when they hit a step that required paper. Many consumers, he noted, are specifically looking for credit unions on Google because they want an alternative to the big banks.

Boosting Response Rates, ROI
When the process is completely paperless, Pitts reported, the completion percentage is significantly higher.

"A lot of credit unions have given up on the online channel as a way of getting new members. It makes sense if they are spending $5 per click to Google but only converting one out of 100. But if they can convert one out of five, or one out of 10 and cross-selling other products, then it is economical. One of the keys to our success is cross-sales."

The oFlows system handles all types of loan products and deposit products, plus insurance products, Pitts said. Because of this, the contextual cross-sale engine can pick up opportunities. In addition to pre-qualifying a member for a loan, he said, the system is able to pre-qualify for a credit card, or a checking account, or make an auto loan refinance offer.

One of the biggest selling points, Pitts pointed out: a member only need apply once, and the cross-sales offers are targeted to products people qualify for and make sense.

"We are experiencing an average 40% cross-sale rate, which is phenomenal," he declared. "We have a single-system solution that centralizes underwriting and processing from all channels-Web, call center and in-branch. What a lot of our clients are excited about right now is the success of cross-sales online-they think that will be huge in the branches. Being able to make those offers while in person with the member will be a big step."

Costa said USA Federal had its cross-sales system set up so every member who qualifies is offered a credit card. She said the CU sees credit cards as "the holy grail," with checking accounts a close second. At least 40% of members who are offered a credit card accept, she reported. On the other hand, if someone comes in for a loan and is cross-sold a checking account, there has not been the same level of success.

"Just because the member comes in to borrow money, they might not be open to switching their checking account," she reasoned.

When members use the system to apply for a loan, the supporting documents that are uploaded by each applicant are self-indexed and categorized. He pointed out 1,000 applications quickly turn into 3,000 to 4,000 faxes coming in over 10 days that have to find their way to a particular file, and all of those applicants are calling the CU to ask, "Did you get my fax?" and "Where am I in the process?"

"With our system, the user designates which document is which-paystub, driver's license, whatever-and then the documents go into the correct page in the application," he said. "Files can be uploaded from the applicant's computer as long as they have a scanner or a digital camera, or even online bank statements in PDF."

An Interesting Finding
What is "interesting" to Pitts is how many people are doing digital uploads of documents during the online application process. He said oFlows had assumed there would be more faxes. Indeed, some had gone through a great deal of trouble to take pictures of each individual page of their tax returns.

"So we called a number of them, and over and over they told us they are more comfortable sending a secure upload rather than faxing, which sends documents to an unknown location. This works out, because the quality of the digital pictures we get is better than faxes, so it is easier to detect if someone has altered a document in any way."

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