Today, lenders are striving to create a faster, more frictionless experience for their members. Adapting to evolving customer expectations means introducing new conveniences, such as enabling customers to complete membership or lending applications online and receive decisions within minutes.
Providing an outstanding digital member experience – from origination to onboarding – is at the heart of how credit unions will further their success in the immediate future. Pressure from fintechs, liquidity challenges, and the rapidly changing technology landscape are driving lenders to adopt new technological solutions.
In my experience, automating loan processing and decisioning is one of those solutions that can help credit unions benefit the most.
How automation helps
There are three advantages to implementing automated loan processing and decisioning.
1. Improved Efficiency. Lenders optimize operational resources with the power of AI by removing outdated manual decision-making and implementing configurable automated decisioning. Consistent application of lending policies allows your staff to concentrate on mission-critical lending tasks.
Plus, improved turnaround times and less manual work lead to faster decisions and funding times, improving the member experience and fostering dealer relationships.
2. Improved Decisioning. While credit unions have historically been reluctant to embrace high levels of automated decisioning, it can improve decision-making. In fact, we have seen AI machine learning increase approvals by up to 25% without a corresponding increase in risk.
As part of automation in processing and decisioning, AI engines can achieve 99% accuracy rates while guarding against fraud and ensuring compliance. Automated document processing has been shown to reduce human error and fraud risk – while helping credit unions provide their members with a more frictionless loan origination experience. Automation not only means speed, but also the ability to process more loans with less points of friction. Even better, for credit unions that need to expand their network of dealer relationships, automation helps deliver faster funding.
3. Improved Digital Experience. Members and potential members demand an easy and quick digital experience, especially in auto lending. How many opportunities are lost simply because an applicant is asked for redundant information or details the lender should already know? Automation is intuitively responsive and elevates the member experience, making credit unions more competitive in the marketplace.
Putting a program in place
Credit unions have often been late adopters when working with automation and auto decisioning. While finance apps and global banks offer cutting-edge technology, credit unions offer personal service. However, automation is now more widely available with configuration capabilities designed to meet your specifications and needs.
Credit unions can use automated loan processing and decisioning to accelerate approvals in specific scenarios while creating automatic rejections for others. These configurations create flexibility to adjust programs to specific risk factors and changing economic situations. Scoring models and risk factors can always be altered, to gain better control.
Automated loan processing and decisioning create a system that assesses relevant information and data related to the applicant, allowing the lender to quickly make a positive or negative credit decision. The lending team can set up the decision engine however they wish and utilize the champion challenger to apply decision variable changes to a recent set of loans to determine how decisions would be rendered. This enables the team to quickly review and deploy automation and then reap the benefits of increased efficiency and accuracy.
AI will continue to be refined as more data is gathered. The market is already seeing risk-based pricing models that can account for how various borrowers with the same credit score can have dramatically varied default frequency rates. AI models can parse through vast amounts of data in seconds. They can find variances that humans cannot – at least not without several months of painstaking research.
How Origence can help
Origence arc was created to help credit unions provide the modern experience that their members demand. With our partner Informed.IQ to power document automation for indirect lending, users have a faster funding experience in auto financing for both dealers and lenders.
With arc OS, we have partnered with Zest AI to empower credit unions with more accurate credit scoring methods and fast automated decisioning. If you’re ready to see how Origence arc can help your credit unions accelerate their digital transformation, get in touch with us.