NationsBank Corp. is streamlining the processing of auto loans with a software program that electronically links the bank with car dealerships.
Developed by Credit Management Solutions Inc., the system, called Credit Connection, lets NationsBank provide dealers with quick decisions on loan applications.
The Charlotte, N.C.-based bank company said it expects to complete a pilot of the system this month with five major dealerships in the Carolinas.
The bank hopes to run 10% of its auto loan business through the system by the end of the year, officials said.
"This type of electronic connectivity is the wave of the future," said John Abadie, president of NationsBank's dealer financial services group. "The system will enhance our ability to do more business with dealers."
Credit Connection is designed to speed loan processing by automating workflows and decision-making on auto loan applications.
Dealers enter loan application data into terminals linked to the system's host computer at CMSI's headquarters in Columbia, Md.
After application data is entered, the system takes over all processing steps, including requesting information from credit bureaus, forwarding application data to lenders, and updating dealers on the status of decisions.
James DeFrancesco, president of CMSI, said Credit Connection can help large banks that already have some loan processing automation by "pushing their automation to the point of sale," and "providing a higher level of service to their dealer clients."
NationsBank's Mr. Abadie attests to the system's ability to significantly streamline the processing of loan applications.
Since it began testing the system in January, the $187 billion-asset company has been able to dramatically reduce the turnaround time on loan applications, he said.
"On Mondays, the day with the heaviest activity because of the large amount of applications initiated over the weekend, we've cut our response time from the typical hour to less than 20 minutes," he said.
He added that, during the rest of the week, the bank has cut response time to an average of 10 minutes.
As a result of the successful pilot, the bank plans to roll the system out to the rest of its service area next month, after it completes new risk-based models designed to further streamline the dealers' role in application processing.
The bank intends to convert the largest of the approximately 2,000 dealerships it does business with to the system eventually.
Credit Connection is expected to become commercially available next month. To participate, lenders are linked to the system by an electronic interface developed by CMSI.
According to Mr. DeFrancesco, a number of enhancements are planned for the system over the next six months, including an electronic bulletin board that will allow lenders to communicate with dealers about loan promotions and other frequently changing information.
Ms. Tucker is a freelance writer based in Hazlet, N.J.