MIAMI-Margin compression caused in part by lowering auto loan rates just to stay competitive has left most credit unions with little choice but to "reinvent" the auto loan process to cut costs.
That is the opinion of Sandy Weil, group VP, strategic products group from Oracle Financial Services global business unit. He said interest in speeding up the auto lending process and cutting costs is forefront in the minds of many FIs.
"All financial institutions, including credit unions, are working to re-invent the auto lending process, focusing on stronger risk management, more disciplined pricing and greater automated efficiencies," said Weil. "Enterprise lending solutions supporting the full life-cycle of the lending process-origination through servicing and collections-along with automated credit scoring can streamline lending operations."
An enterprise system supports the elimination of duplicate data entry and reduces CU staff keystrokes, explained Weil. "Deploying better technology allows credit unions to process more loans with improved quality than a competitor that is not using automation."
Weil said automation not only lowers the average cost per auto loan and lease, it creates a consolidated analytical view of information. "Credit unions are analyzing their own data more actively-the member's financial situation and the collateral-to determine which loans need to be priced at a premium due to higher credit risk, which also retains the appropriate margins."
20%-25% Productivity Increase
Citing performance metrics from CUs using Oracle's automated lending solution, Weil said auto-decisioning dramatically speeds credit decisions (within minutes), with CUs seeing a 20% to 25% improvement in productivity for their underwriters and loan processers. "Some organizations utilize real-time data to enhance member service, including a customer self-service portal."
Better collection strategies supported by automation has seen Oracle clients reduce delinquencies and losses by 10% to 15%, noted Weil. "Auto lending, as we all know, is highly competitive," concluded Weil. "Credit unions are improving their origination systems and streamlining both the servicing and collection departments to remain in the game."
