TAMPA, Fla. -
"I was told to go out and compete with the Bank of Americas, but I didn't have the right tools to do it," said Larry Rupp, vice president, business lending, at $2.1-billion GTE Federal Credit Union here, which has been making business loans since 2003.
CU core systems just weren't built to handle business loans, agreed Larry Accola, senior vice president of business loans at $800-million Royal Credit Union in Eau Claire, Wis.
"The architecture is so incompatible with commercial lending that it's almost impossible," Accola said.
At Tongass FCU in Ketchikan, Alaska, Helen Mickel, operations and loan manager, likes to offer flexible payment schedules to seasonal business borrowers, but the core system at the $33-million CU won't cooperate, she said.
CU core systems can't even perform the fundamental work of processing a simple line of credit with interest due on a quarterly or monthly basis, added Pat Spencer, national sales manager at Carmel, Ind.-based Baker Hill, which provides business process solutions and consulting.
Credit unions have been singing the same tune to Credit Union Journal for the past five years, demonstrating their desire for better business lending tools in several articles regarding commercial lending technology.
The answer, for some credit unions, has been to use hand-me-down origination and documentation software built for big banks.
The result: loan officers spend a lot of time trying to get the accounting system in the loan software to talk to the accounting system in the core processor.
"The downside is that we have to make manual adjustments in our core system for some of our business loans," Mickel explained.
The prognosis is not good, continued Accola, who has been in business lending for 25 years, 15 of which were at Royal. "It's going to be light years before any credit union core system does all the things we need to do as commercial lenders."
GTE Federal and Royal, however, realized that they took a step in the right direction nearly four years ago by mixing up their own business loan software and core system combination.
The credit unions run on The Complete Credit Union Solution offered by Open Solutions, Inc. (OSI), interfaced with the Baker Hill origination and relationship management solutions for commercial lending.
"OSI is the closest to serving the credit union commercial lending community of any of the core systems," suggested Accola. "We use OSI as the accounting system and Baker Hill as the operating system."
"That puts us miles ahead of where we were," Rupp said.
The Baker Hill OnePoint relationship management platform grabs exception and financial statements from the core system daily, said the CUs, whose portfolios are 80 % real-estate secured.
Previously, the credit unions tracked exception and financial statements manually. The old exception-tracking system at Royal required eight separate Microsoft Excel spreadsheets, according to Julie Frey, business operations supervisor at Royal.
The GTE loan officers have a better view of the individual member as well as the member's relationship with the credit union because OnePoint imports data from the core processing system and delivers "tickler" reports, Rupp said.
The Baker Hill Bank2Business origination software allows Royal to make good decisions with minimal data in half the time that the manual process required, Accola said.
"We were spending as much time on smaller loans as we were with larger loans and we weren't making better decisions than we are now," he added.
Profitability looks good, the credit unions say, in part because the technology has helped the credit unions keep a bare bones staff while growing volume.
GTE Federal Credit Union's portfolio leaped to $60-million this month from $30-million in 2005, Rupp said. Meanwhile, the lending staff has remained at six full-time employees over the same time period.
The Royal portfolio is at $220-million, up from about $175-million in 2003, Accola said.
The credit union has added two employees to its 16-employee staff in that time period.
For More Information
Read more about business lending technology at cujournal.com and search the following bolded terms in the archive:
Document System Becomes Difference Maker, for more on how CUs have found a flexible documentation system for business loans.
How IT Dept. (Of One) Resolved PC Security Demands, for a story about GTE FCU's early experience with the Baker Hill software.
Integrating Business Members, to learn how Fairwinds CU struggled before it successfully integrated business and personal accounts.
For info on this story:
* GTE FCU, www.gtefcu.org
* Royal CU, www.rcu.org
* Tongass FCU, www.tongassfcu.com
* Baker Hill, www.bakerhill.com
