Wachovia Corp. is using a new credit review and processing system to automate indirect lending at its operations services unit.
The Winston-Salem, N.C.-based superregional bank chose the CreditRevue software from Credit Management Solutions Inc., a financial software vendor in Columbia, Md. CreditRevue, the vendor's core product, helps banks by managing the credit application and decision process for car loans through dealership customers.
Handling these indirect lending transactions can be tricky because the dealer or the consumer could be falsifying information when applying for the loan, said James DeFrancesco, president and chief executive officer of Credit Management Solutions.
Weeding Out Risk Factors
"In order to be an astute player in indirect lending, you have to understand the reailers themselves," he said. "And you have to eliminate the worst 10% of the dealer base that you have a poor relationship with, and the credit quality would increase 100-fold."
CreditRevue maintains automated consistency in its decision processing and provides faster turnaround time to dealers. The system handles credit bureau checks, verifies address and employment information, and cross-references against other applications coming in from other car dealers.
Wachovia officials would not comment on the bank's use of the product, saying it was "too premature" to make any statements, according to Nancy Lovelace, a spokeswoman for Wachovia.
Vehicle Evaluation
The client-server-based system has also been customized to interface with the bank's vehicle evaluation software -- which judges the value of a new or used car -- to better determine payments and approval of the loan.
Although many banks shy away from the indirect lending business, Mr. DeFrancesco said that bigger banks can clear a tidy profit fom these operations if they are willing to show a strong commitment.
"It's either in or out," he said. "There's no halfway."
Other users of the company's CreditRevue include Boatmen's Bancshares, NationsBank Corp., U.S. Bancorp, Novus Financial Corp., and Citizens Bank of Rhode Island.
Novus and Boatmen's also use the company's other bank automation product, CrossSell, used to help market more products to their customers.
