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OPERATIONS
Consider how standardizing lending might meet member needs, impact staff and align with your CU's long-term goals.
Today's competitive environment and the growing expectations of members for services that accommodate increasingly hectic lifestyles have created the need for credit unions to re-examine service delivery methods. The challenge lies in delivering personal banking solutions that are convenient and reliable to members at a cost that is affordable to the credit union.
Automated lending can help CUs capitalize on the promise of technology to streamline this critical business driver. Successfully adopting an automated lending program can only happen when credit union leaders align their technology strategy with member needs, the entire organization and the CU's long-term development plan.
AUTOMATED APPROVAL MATRIX
An automated lending system can range from a simple online loan application to automated data collection and automated approvals, including immediate member notification.
Having an automated approval matrix at the core of the lending process allows for maximum efficiency. In creating this matrix, a credit union selects cut-off points for automatic approval. Scores above the cutoff are approved by the system. Careful research is necessary to ensure your automated approvals maintain the integrity of your manual process.
When establishing an automated approval matrix, members' credit scores, obtained from your credit bureau, are generally the driving factor. The following planning steps will help ensure the system's success:
* Select different cut-off points based on loan type and associated risk.
* Study the results of past manual approvals, related credit scores and subsequent loan performance to establish reasonable cut-off points.
* Ask your credit bureau for national statistics on credit scores and related loan performance. While your own past performance is the best source of information, national statistics can supplement your study.
* Periodically consult with your credit bureau on additional information that has become available for monitoring credit scores. As your credit bureau's database expands, new trends may be revealed that can be used to enhance the asset quality of your portfolio.
Your responsibility for maintaining an efficient and effective automated approval system is ongoing. You will need to modify your approval matrix in light of expanded loan offerings, changes to your membership base and economic shifts. To identify what changes are needed,...