Successful Lenders Share What Works For Them Online

Two credit unions that have had great success with their e-lending programs shared some best practices and lessons learned with loan officers attending a recent meeting sponsored by the CUNA Lending Council.

The two credit unions doled out advice ranging from how to "get in the member's face" to how to avoid "the highest insult" online.

"What we keep hearing across the board is that members still want that face-to-face time," said Pierre Cardenas. SVP-lending and deposits at Government Employees CU of El Paso (Texas). "So, we have to put (e-lending services) in front of them and educate the masses."

To get e-lending in front of members' faces, GECU first analyzed its web traffic. "They went to their accounts to check balances and then got out," he noted. "We realized that's where we've got to get them."

The Next Step

But just promoting and linking e-lending at web traffic hot spots isn't enough. The next step is to offer some other value to the member.

"Most members looking to buy a car are going to do some research, and that research can take two or three hours. We save them time by doing the research for them and show them how to buy the vehicle and be an educated buyer."

GECU took it one step further and talked with local dealers about setting up links between the CU's site and the dealers' sites. Participating dealers are listed on GECU's auto resources page, and then those dealers include a link on their site that takes the person to an online auto loan application at the CU's site.

How'd they come up with the idea? "The dealers wanted to advertise in our newsletter," Cardenas explained.

"We weren't going to allow them to do that, but it clicked, and we decided to put together the dealer link program. No money changes hands, but the dealer gets to 'advertise' on our website, and we get a prominent link back to our loan application."

The program is relatively new and just keeps getting bigger. "This is only going to grow because the socio-economic barrier to owning a computer and having Internet access is being knocked down," he suggested.

At Digital CU in Marlborough, Mass., the credit union has tweaked its e-lending capabilities to face down a common problem lenders have.

"The lending dilemma is to make a good decision faster, but it must be consistent across all channels," said Diane Richard, vp- consumer loans. "We want to deliver true on-line fulfillment of loans, 24 by 7 by 365, but we want to make sure that no matter which channel you go to, you're getting the same decision."

To do this DCU started doing mass pre-approvals across its membership.

"But you have to manage the risk," Richard acknowledged. "We do this by pre-screening our members. We pre-screen every quarter, and then we promote through every channel."

As part of the screening process, Digital sends its tapes to Equifax and then downloads that into the system so that tellers will be aware of which members have been pre-approved.

That way, Richard explained, when a member goes into a branch to drain his savings account for a downpayment, the teller can take that opportunity to say, "why remove all that money when you are pre-approved for a loan here?"

How The Process Works

The same tape is also loaded into the call center as well as the online lending module.

"Let's say a member logs on and doesn't know he's been preapproved. He fills in the first portion of the application, and he is automatically approved and doesn't have to fill out the rest of the application," Richard commented. "About 50% are pre-approved through this process online."

For those who aren't automatically approved, they are contacted within 10 minutes either by the call center or by e-mail. No one is outright denied online.

"The online process takes only a minute or two, and you never want to deny someone a loan in just a minute two," Richard observed. "That's the highest insult. Instead, we spend a little more time on it."

The extra time is worth it: the approval rate is about 90%. And arming frontline staff with credit bureau and preapproval information means better cross sale opportunities.

But when Digital says it has "100% online lending, including fulfillment," they're not kidding. If a loan is approved online, the credit union will overnight a check to the member, or the member can come into the branch for same-day payout.

"We are not asking for a bill of sale, and sometimes we don't even ask for the dealership information," Richard said, noting the credit union will actually send what is tantamount to a blank check. It's payable to the member, good for up to a certain amount of money. The member can then go to the dealership, check in hand. Sample disclosures are e-mailed to the member, and then when a final amount is negotiated, a specific disclosure is sent.

When the member endorses the check over the dealership, the member is agreeing to all terms, and the loan is booked the day the credit union receives the check.

"When we first started this, we did have some dealers refuse to accept the check, but we now give them $100 on those deals. And you have to trust that the member will get the best deal they can."

To monitor the automated decision process, the automated lending tool, Decision Power, is assigned its own loan officer number so the credit union can keep track of the loans it is approving.