Getting 'Smart,' Losing Inefficiencies

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Credit Union: US Airways FCU

Nominated By: USERS, Inc.

Nominated For: Lending Efficiencies

Credit unions have long sought ways to automate rote functions as a way to increase services and decrease costs. With implementation of its "smart" lending program, U.S. Airways Federal Credit Union reports it has taken automated lending to the next level.

"In 2001, we found lots of inefficiencies in our lending program," says Kevin Dougherty, assistant vice president of technology for the $670-million credit union. "We wanted technological solutions to change that."

The solutions U.S. Airways found came through a suite of services from USERS Inc., Valley Forge, Penn. The credit union installed USERS' Loan Navigator, Loan Queuing and Risk-Based Pricing Systems to enable faster, more automated decisions through internal loan application and approval processes, says Dougherty.

The suite runs with an almost manufacturing-like efficiency, according to Dougherty. Loan Navigator itemizes and manages system functions through the credit union's database, while Loan Queuing automatically categorizes loan types-from car loans to mortgages-and sorts them into individual automated "queues" for proper handling and management.

The system becomes more sophisticated as the risk-based pricing software kicks in, says Celeste Rohoza, assistant vice president of lending. Using FICO models, the software assesses risks evident in the borrower's file and based on the type of loan and nature of the marketplace. The system then grades the loan applications as A, B or C commercial paper, and applies rates and terms appropriate to the risk presented by the borrower, Rohoza says.

Internal processes are further augmented by USERS' WebLoan, a program allowing borrowers to apply online 24-7 and have their loans evaluated and pre-approved. The system's real kicker, however, is the vendor's iCBI-Internet Credit Bureau Interface-that downloads borrowers' credit scores and factors them into the pricing and approval process.

Loans can be accepted, approved and made ready for funds disbursement by a loan processor, Dougherty says. It's the only point in many cases where staff members get involved, he explains.

"We're looking to add a Maxxar voice recognition system so that people can apply for loans by phone without having to press the keypad buttons," says Rohboza. Voice recognition would further improve the system's efficiency and reduce the amount of callbacks from borrowers unable or unwilling to press phone buttons, she says.

The USERS system has streamlined processes and cut costs since its implementation, according to the credit union. Among the largest of those costs have been employee positions, lost through attrition, that no longer need filling.

So far, a half-dozen lending staff positions have been eliminated and costs related to supporting those positions have been saved, says Dougherty. While that wasn't a primary goal of implementing automated lending, it's become a valuable by product to its success.

Another byproduct is the system's ability to provide outgoing channels to borrowers to whom U.S. Airways wants to market other types of loans. That ability well matches pending changes in the credit union's overall environment, Rohoza says.

"We're moving to a much more sales-oriented culture," Rohoza says. "This system helps us takes steps in that direction."

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