COLUMBUS, Ind.—With banking transactions increasingly moving toward mobile, Centra Credit Union has successfully adopted smartphone lending technologies here, which has more than doubled the number of loans closed each month.
"We wanted to stay ahead of the game knowing that a lot of members prefer to do most of their banking online," said Centra CU's Director of Consumer/Indirect Lending Operations, David Hodapp.
With 127,230 members, 23 braches, 282 employees and $1.2 billion in assets, Centra CU took a measured approach when seeking a mobile lending solution. From discovery to rolling out CUNA Mutual Group's Smartphone Loan Technology, Hodapp said the "seamless" process took about five months.
Steve Hoke, director of Loan Growth and product leader for CUNA Mutual Group's Smartphone Loan Technology and AskAuto App, explained that more and more credit unions are seeking expedited mobile and online lending solutions because of increasing demand.
"There is a misconception about mobile. Often times it is seen as an expense item when it should be viewed as a revenue opportunity," said Hoke of the company's loanliner.com offering. To support his stance, he explained that year-over-year mobile growth at CUNA Mutual Group has realized significant increases.
For example, in 2010 mobile transactions represented 4%. The following year the number climbed to 5.7%. In 2012 it again rose to 12.3%, and as of July 2013 mobile transitions hit 16.4%.
In the two years since loanliner.com went live, Hoke said more than 1 billion in loan requests have been received. "The demand was there and we caught the wave," said Hoke. According to statistics he provided, the average age of a desktop user is 40 with a median age of 29. For mobile, the average user age is 31 with a median age of 24. "For a first home buyer, this helps credit unions understand the younger age demographic."
When Centra CU first rolled out the solution in 2011, Hodapp was hopeful that loans would increase, but couldn't be sure. He was soon surprised by growth.
"The dollar amount closed per month increased from $150K to approximately $450K," said Hodapp. This equated to 30 to 35 loans closed via mobile/online opposed to 15 closed via the branch.
While loans increased, the statistics aggregated also provided Centra CU executives with better insights into member demographics. "What surprised me the most about the solution was the average score of members who applied through the web/smartphone were low, a 580 average," he said.
Qualifying loan questions are "tailored" to the respective CU, according to Hodapp. "We are essentially collecting the information and passing it along to the credit unions." For this service, credit unions are charged a monthly support fee plus a fee per each loan application/transaction.
"Centra does tailor its questions to specific loan requests because some loan requests need more information than others such as HELOC loans," noted Hodapp. "We decided on certain qualifying questions by using our existing in-branch application along with the help of CUNA Mutual Group's project team, which made it very tailored and got the necessary information we needed for the loan request."
20 (Or More) Questions
Depending on the type of loan, Hodapp said there are between 20 and 35 questions that the member must answer. "Normal turnaround time from time of application to decisioning is no longer than 24 hours. However, Centra decided to go with an automatic decisioning that would deny or approve loan request and would meet certain criteria. This provides instant approval/denial."
On average Centra CU reviews approximately 70% of loan requests. The balance are auto loans and are handled by different decision makers. "I would guess the average percentage of approved mobile loans to be 25%," said Hodapp adding that that "all types of members are using this technology due to the convenience and ease of doing the application."
