Navy FCU, VINtek Team Up On Direct-To-Consumer Auto Lending

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PHILADELPHIA-VINtek, a direct auto financing company based here, is preparing to make another major push into the credit union market, this time with direct-to-consumer lending.

The firm already works with the country's largest credit union, Vienna, Va.-based Navy Federal Credit Union, and the pair is in the process of solidifying that partnership for direct-to-consumer lending, with the possibility of launching during the third quarter of this year.

The company already does direct-to-consumer financing for such large providers as Bank of America, and VINtek founder and CEO Larry Highbloom said that the strategy of starting big and using those prestige clients as a means of expansion has worked well for the organization.

"We take a marquee client who is often looked at as an innovator or a leader, and with that client we first service them and get out into the market with them, and then we turn around and go back to our existing base and start offering our services to them," said Highbloom. VINtek currently works with more than 400 different credit unions.

VINtek provides web-based services for financial institutions to compile and complete loan documents, as well as e-signature services and title storage, and Highbloom said that despite the digital nature of the service, it's still all about member relationships.

"You're dealing directly with your member," he said. "You're not dealing with an application that may have come in from another source."

While VINtek handles the documentation and lien processes, consumers still apply directly with their credit union. Members may later be directed to the VINtek website-at the CU's discretion-but Highbloom said, "depending on how the credit union instructs us to act, we may reference ourselves as a vendor for the credit union or as a part of the credit union."

In addition, he said that because of a VINtek service that takes care of title and tags for the consumer, "we're dealing with the non-value adds of the entire process for the credit union ... so that the credit union can focus on its core competencies. The credit union staff and capital is focused on attracting applicants, making the loan decision and the negotiating and closing of the loan with the member. So for the things that are non-value adds, we've stepped in and we do that so that the focus of the credit union is on what they do to grow their business."

Dave Ledwell, Navy Federal's assistant vice president of consumer lending, noted that his credit union had been working with VINtek since 2007, reducing Navy Federal's costs through electronic titling and in turn helping to grow the CU's auto portfolio. He pointed out that NFCU's auto business for February 2011 was up 44.9% over February 2010, whereas the market overall was up by 27%.

Ledwell was hesitant to comment on the expanded partnership with VINtek because so many elements are still being worked out, but praised the company's track record of working with large FIs and its technological prowess.

As the credit union community continues to expand and embrace digital and mobile banking, Highbloom pointed out that there are many opportunities for CUs to take advantage of that technology when it comes to direct-to-consumer auto lending.

"A member could be walking down the street, see a car advertised for sale, punch up an application to their credit union [on their mobile device] and, depending on their credit situation, they could get an instant application," said Highbloom. "We can immediately post their docs, and the member can walk into the homeowner or the dealership selling the car and start negotiating." He added that embracing this technology will be especially important in the coming years, as younger consumers do more of their financial business digitally and credit unions continue their push to attract younger members.

Highbloom, a credit union member himself, noted that the movement has always had a good understanding of direct auto finance and its appeal to the member base. "As the population demographics continue to change, I believe the demand for direct auto finance will grow, as consumers want to be in control of transactions. So credit unions that have already been in this space are most positioned to capitalize on the demographic demands of the population, and I see very, very strong times ahead for direct auto finance in the credit union industry."

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