AUSTIN, Texas -
Credit Union Journal spoke to Teres Solutions Inc. CEO Tim Kelly recently about his expectations for credit union lending programs in 2008.
CUJ: Why do you think there’s going to be a big uptick in 2008 in the number of loan applications that CUs will process? Do consumers think it’s easier to obtain a loan from a credit union as opposed to a bank or other lender?
Kelly: It’s a couple of things. It’s a combination of appetite for loans at large. It has slowed a bit. With the retail orientation of credit unions, we see more applications (for mortgages).
On the consumer side, in individual lending we anticipate credit unions looking at more applications to review to get to the right applicants.
Also it’s their stated mission to serve the underserved. I have a couple of customers in South Florida, CUSOs, that believe they’ll have to look at more applications in 2008 to get what they need–that’s how they’ll justify buying the new software. Credit unions still have money to loan, so the institution where he works doesn’t want loan ratios/profits to soften.
CUJ: What kind of trends in loan volume have your credit union clients seen in the last few quarters of 2007?
Kelly: Auto and mortgage lending have been flat. We’re anticipating an uptick in the amount of applications that will be reviewed for auto and mortgages. A lot of tightening (in lending criteria) is coming from the mortgage side. Some larger banks forecast issues in mortgages seeping into the auto market.
Consumers will start running to the credit unions. Because the orientation of credit unions is more toward the consumer, they have the knowledge and ability to get to the decision that will qualify more people. Most banks are wholesale orientated. Credit unions are people orientated.
CUJ: Let’s say I’m a credit union. Why would I want to invest in a new software solution in 2008?
Kelly: Our sense is that you’re going to need to review more people in order retain your volume goals. You find a sharper axe to be your tool without having to add more staff. You get accuracy in process automation with SAIL because you can pre-program auto approvals parameters into the software.
Fifty percent of validation is approved automatically with the software engine, that speeds the process along to the underwriter who now does not have to spend time weeding out bad applications.
CUJ: Do see streamlining the loan application/lending process as a growth strategy CUs need to get onboard for in 2008?
Kelly: We think they’re going to have to do more to maintain what they got or to increase their numbers in 2008. They will definitely have to do more to maintain where they are. You either have to increase expenses or you automate. They will have to do more with what they’ve got and when they expand, they will need to re-evaluate technology that allows them to serve their members more profitably.
