The secret to lending lies in integration, one analyst is stressing.
Tim Lerew, president of Elizabeth, Colo.-based financial institution consultancy Tim Lerew and Associates, told attendees of the Credit Union Association of Colorado's annual meeting here he is "passionate" about CUs being loan-based, and that integrated lending is the strategic coordination of marketing, technology, products, processes, staff and borrowers to effectively deliver competitive loans at a reasonable cost to both the borrower and lender.
"What people often forget is the staff part," he observed. "And sometimes the member/borrower side."
The first step towards integrated lending is an examination of a CU's current processes, examining everything from the host system vendor to marketing efforts to staff training and performance. For example, he asked members of the audience if their credit unions have automated loan origination systems and/or take loan applications over the Internet.
Approval Time Is Key
"Not many credit unions offer loan applications online, and few can approve the loan while the member is waiting," he said. "Approval time is important, as is marketing. Marketing is communications-let people know what the credit union is doing."
One example of integrated lending is the case of a large CU in the Midwest that wanted to boost loan productivity. Lerew said the credit union's staff told management the manual loan process was cumbersome, and they did not know what and when to cross-sell to members.
The CU's response was to design a new, web-based loan origination system that could be used by both staff and members. The system was integrated with the host and legacy systems and allowed for tiered pricing and custom decision scorecards.
"When a credit union is addressing its existing delivery channels, it must examine if it is tracking and/or compensating tellers for cross selling loan products," said Lerew. "If not, this is one of the easiest ways to increase lending."
A bad example of expanding online lending capabilities: Lerew said one CU simply scanned in its loan application. "This generated very few loans, because the process was too difficult," he assessed.
Lerew, who said 80% of his clients are credit unions, offered the five most common staff resistance factors to e-lending: they don't know what "e-lending" means, uncertainty about how to use new technology, concern about their place in any new organizational structure, anxiety about the potential loss of their job and fear of the unknown.
"Credit unions will have to do some handholding with staff-and members-as they integrate lending. They will need to offer training for staff, which addresses all of these objections. Make sure all questions are answered."
In addition to the web, Lerew reminded that the telephone remains a viable means of booking loan business. He said voice-recognition technology has advanced to the point a voice system makes a loan officer available 24/7 at a reasonable cost. He performed a live demonstration by calling a Utah-based credit union and getting approved for a loan in just minutes.
Taking Out The Drudgery
Speech-based lending systems take the "drudgery" out of the loan application process, he continued. A voice loan system can obtain the applicant's employment and income information, and can even pull a credit report.
Lerew stressed that technology, when properly implemented, empowers staff and brings convenience to members.
However, he emphasized that the staff must "buy in" to the system and the process for electronic origination systems to reach their potential.
As for the competition: "Credit unions don't need to offer the best rate on the planet, but they do need to offer great member convenience," he said.
11 LENDING TIPS
COLORADO SPRINGS, Colo.-Consultant Tim Lerew's had these 11 tips for improving lending:
* Perform marketplace and member research.
* Link host, lending software and web systems.
* Publish and adhere to e-mail service and marketing standards.
* Automate underwriting.
* Offer 24/7 loan approvals.
* Look to HELOCs for profit and asset-liability management.
* Track and publish loan production statistics.
* Have user-friendly, simple online loan applications.
* Add "Loan" buttons and calculators to the bill pay portions of the CU's Web site.
* Hire staff with a positive lending attitude.
* Understand that staff training, acceptance and personal use makes lending technology work.
