EAST WINDSOR, N.J.-For McGraw-Hill Federal Credit Union, when it comes to loan origination software-be it a student loan or an energy loan-success is in the clouds.
"We were introduced to LendKey about three years ago for their student loan origination platform," said McGraw-Hill FCU CEO Shawn Gilfedder. "Our goal was to offer a customized product that allowed our members to get the information and support they needed to enter the private student loan market with our advantageous pricing structure."
With 20,250 members, 54 employees, three branches and $305 million in assets, the credit union soon realized an uptick in loan rates. "We have seen steady double-digit growth in the private student loan product," said Gilfedder, who reiterated that the product was non-existent three years ago.
The New York-based LendKey, formerly the private student lending solutions provider Fynanz, provides over 235 credit union clients with a cloud-based, secure lending infrastructure. The company's CEO, Vince Passione, said credit unions clients have refinanced over $125 million in private student loan debt, while saving borrowers over $25 million in interest payments.
Before signing with LendKey, Gilfedder explained that he and his team vetted other vendors over a three-month period from discovery to rollout with no significant hiccups along the way.
"There is little need for integration. Their [LendKey] process is similar to working an external originator/servicing platform," said Gilfedder. "The platform is the standard and offers a servicing solution that basically takes most of the operational workload off the end user."
Optimizing Loans
Since the platform is cloud-based, there wasn't a realized impact on McGraw-Hill FCU's existing technologies. The majority of training was directed toward the credit union developing loan origination guidelines that were in sync with LendKey.
"There was no impact to our core. Their systems are cloud based and they manage everything from the membership opportunity to scheduled disbursements," said Gilfedder. "Basically there is an ongoing underwriting review process and monthly reconciliation process very similar to standard servicing arrangements."
The success of the student loan origination platform led McGraw-Hill FCU to explore additional prospects that could be considered unconventional by some in the credit union industry.
Opportunities To Consider
"There are opportunities credit unions should consider in the alternative education channel, such as trade schools, as well as energy loan programs and the like," said Gilfedder. "There is a great opportunity for credit unions to work cooperatively in aggregate loans for participation. LendKey offers some great intellectual capital as part of their methodology and a broad network of participating credit unions."
The next loan-based initiative for McGraw-Hill FCU will be implementing a program for an educational trade association. "We anticipate $5 million to $8 million of annual loan production from a single resource and plan to expand the offering to other venues, including the energy sector here in New Jersey," said Gilfedder.
Gilfeder advised other credit unions searching for a cloud-based loan originating platform to "think beyond the traditional box and look at the opportunity to aggregate loans, grow membership and diversify your product pipeline through a technology-based solution."
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