Headlines:
Credit Union to Use Speech Recognition Banknorth Gets Import-Export Portal Nat City Joins Auto-Loan Database VeriSign to Purchase Guardent
Credit Union to Use Speech Recognition
US Airways Federal Credit Union of Moon Township, Pa., plans to use a speech-recognition system to take loan applications by phone.
Members will be able to access the system, which will use natural-language speech-recognition software from Maxxar Corp. of Detroit, starting in midmonth. US Airways Federal will set up a toll-free number for the system, which will be used in conjunction with the credit union's automated call-distribution system.
"This will be our future. Long term, you will see more of this from us, " said Kevin J. Dougherty, the assistant vice president of technology at the $624 million-asset US Airways Federal. "We are expecting to funnel all" loan application calls through this product, "because it's that easy. It's just like having a conversation on the phone."
The credit union has been using an audio response system so customers can apply for loans using the telephone keypad. "My speculation is that we will quadruple our volume" by using speech recognition, Mr. Dougherty said in an interview Dec. 22. "Literally, it pays for itself."
The credit union plans to use the software for a variety of loans, including its credit cards, second mortgages and home equity lines of credit, and personal loans, both secured and unsecured, he said.
But the system cannot consummate the deal with a signature and a handshake.
"We want this to be a channel to get things started," even if members cannot complete the loan-application process over the phone, Mr. Dougherty said.
US Airways Federal provides automated decisions on the phone, with credit scoring and risk-based pricing for the borrowers, to give loan approvals before the customers hang up.
The credit union plans to streamline the oral application process by reducing the amount of information that members must provide on the phone. "We're asking too many questions" under the current system, and that is time-consuming, Mr. Dougherty said. "It was a good learning curve for us."
The speech-recognition system may not be able to capture all the information necessary to complete a loan application, but with information on the member and the dollar amount, it could provide an initial decision, and the bank could follow up, getting details such as a vehicle identification number for an auto loan.
Also starting this month, members will be able to make address changes using the speech-recognition system.
"We planned to go live with it before now," Mr. Dougherty said. "We were going to use this as an overflow and as an after-hours option." But after seeing the system's capabilities, executives changed their minds, he said. "We want to front-end everything through this."
The bottom line, Mr. Dougherty said, is that "it's a lot cheaper to run them through that product than to have them talk to somebody in our call center."
Banknorth Gets Import-Export Portal
Banknorth Group Inc. is now in the international trade business.
Corporate customers of the Portland, Maine, company can use its new online trade portal to access records, track the status of purchase orders and letters of credit, and pull information from the bank's system back into their own accounting systems.
"We think this is an important step in automating the import-export function for the companies," said Bennett W. Schwartz, a senior vice president and the director of international banking at Banknorth.
"We only have a handful of customers so far, but we have a pretty good pipeline," Mr. Schwartz said in early December. Banknorth was hoping to have 100 customers using the portal by early this year, he said.
Banknorth decided that the way to enter international trade was by outsourcing the work. It is being done by the Dutch financial services giant ABN Amro Holding NV, which offers such services to regional banks around the world. Banknorth introduced the portal in November, branded with its corporate logo.
"It allowed us to hit the market very rapidly with state-of-the-art capabilities for our customers," Mr. Schwartz said. "It provided us with extremely competitive products without the massive investment" of developing the capabilities in-house.
"It's harder for middle-size players like us to keep up with the technology investment for a relatively competitive business like this," he said. (In the New England market the $26 billion-asset Banknorth is dwarfed by such competitors as the $71 billion-asset Citizens Financial Group Inc., a Providence, R.I., unit of Royal Bank of Scotland Group PLC, and the $196.4 billion-asset FleetBoston Financial Corp., which has agreed to be bought by the $933 billion-asset Bank of America Corp. of Charlotte.)
Customers have become more comfortable using the Internet for banking, and the portal has had a favorable reception, Mr. Schwartz said.
"I have yet to show this to a customer who doesn't think this is a great idea," he said. "They're not hesitant about it the way they might have been even a year ago."
Nat City Joins Auto-Loan Database
National City Corp. says it is the first banking company to take part in an online service that matches up auto-loan applicants with lenders.
The Cleveland banking company has begun enrolling the 2,900 new- and used-car dealers in its six-state midwestern network with BIGFNI, a system operated by Bankers Integration Group Inc. of Laguna Miguel, Calif.
Garry W. Marquiss, a senior vice president and the automotive-finance manager at National City, said it discovered BIGFNI at the National Automobile Dealers Association meeting in San Francisco in February, where Bankers Integration introduced it.
"It allows us to get to the dealer better, faster, with a quicker decision," Mr. Marquiss said in an interview.
Bankers Integration, backed by a number of auto industry executives including former Ford Motor Co. chairman Harold "Red" Poling, developed a "decisioning engine" for BIGFNI that matches car-loan applicants with lenders on the basis of factors such as location, pricing, credit rating, and the vehicles' year, make, and mileage.
Other car-loan databases do not sort so thoroughly, Mr. Marquiss said. "If we say yes" to a loan match, "we have a high likelihood of getting that business from that dealer," he said.
Ted Cunningham, the vice chairman of Bankers Integration, said lenders waste time and effort by reviewing loans they are not likely to close. Online lending systems have made it easier for dealers to submit loan applications to multiple lenders, he noted, so the percentage of loans that the lender closes - what he called the "book-to-look" ratio - has dropped to the teens for many lenders, versus 30% to 40% in the past.
Bankers Integration plans to add three nonprime lenders to its system this month and two to three lenders each month starting in January.
It competes against the lender-backed DealerTrack Inc., which has more than 50 participating lenders, and the automaker-backed RouteOne LLC, which is developing an online system including the manufacturers' own captive-finance units and other lenders.
Mr. Marquiss said National City also participates in DealerTrack's network. "Being associated with multiple platforms gives us the ability to reach more dealers."
National City joined BIGFNI in early October and completed an initial pilot program at the end of November.
"We've had a couple of technical difficulties that were expected, and some that weren't," Mr. Marquiss said. "To date we've worked out all the technical bugs. We think the system is ready. Applications are flowing through the system, and answers are going back to the customers."
About $6 billion of National City's $121.1 billion of assets are auto loans, Mr. Marquiss said. "It's a fairly important piece of our business."
VeriSign to Purchase Guardent
VeriSign Inc. has agreed to buy Guardent Inc., a provider of computer security for financial services companies.
VeriSign, of Mountain View, Calif., already provides network security services. It said in Wednesday's press release announcing the deal that the purchase would give it one of the largest active bases of devices under management worldwide.
Guardent, of Waltham, Mass., said its client list includes 15 of the industry's top 50 companies.
The deal is expected to close this quarter.
"In addition to being a world-class company in its own right, Guardent is a perfect strategic fit," Stratton Sclavos, VeriSign's chief executive, said in the press release. "By combining forces, we will solidify VeriSign's leadership in network security. Moreover, by tapping into Guardent's expanded customer base, its vulnerability management technology, and security expertise, we can deliver an even wider base of … intelligence to our customers."
