Is tech sprawl harm­ing your lend­ing?

Turns out there is such a thing as too much tech­nol­ogy — but only if it’s not prop­erly in­te­grated with all of your credit union’s sys­tems, not just the core.

Credit Union Journal - - Front Page - BY BRIT BARKER

HOW MANY SYS-tems, both dig­i­tal and man­ual, do your mem­bers and em­ploy­ees have to nav­i­gate be­fore book­ing a loan? The an­swer may sur­prise you — and pro­vide some crit­i­cal in­sights if your credit union isn’t meet­ing its loan growth goals.

Tech sprawl is ev­ery­where. Of­fice work­ers ev­ery­where of­ten have sev­eral web browser tabs and pro­grams open at once, tog­gling back and forth be­tween them to do their jobs. And what about your smart­phone? In a sin­gle day you might use up to 20 dif­fer­ent apps to per­form a va­ri­ety of tasks— and maybe even make a phone call.

Yes, tech­nol­ogy has ex­panded our abil­ity to do more things with greater ease, but ac­cord­ing to the U.S. Depart­ment of Com­merce, our na­tion’s gains in gross do­mes­tic prod­uct are in­creas­ing at the same rate as av­er­age hours worked; in other words, we aren’t gain­ing any ef­fi­cien­cies.

When look­ing specif­i­cally at lenders, not all are in­ef­fi­cient. Some have im­ple­mented a ro­bust loan orig­i­na­tion sys­tem (LOS) that serves as a cen­tral hub and pro­vides smooth in­te­gra­tion with the core sys­tem, as well as the var­i­ous third-party providers re­quired to quickly move bor­row­ers from ap­pli­ca­tion to fund­ing. Today’s con­sumer ex­pects the lend­ing process to be fast and easy, and nu­mer­ous stud­ies have shown con­sumers value con­ve­nience over price or loan provider.

If your credit union is con­sid­er­ing the move to an LOS (or needs to re­place or up­grade its ex­ist­ing sys­tem), here are some im­por­tant ques­tions to ad­dress as you be­gin your search.


All soft­ware providers claim they in­te­grate well with other tech ven­dors, but it’s im­por­tant to do your due dili­gence and con­firm those claims. Your LOS must not only con­nect with other sys­tems, it must do so com­pletely and ef­fi­ciently.

For ex­am­ple, your credit union might have sep­a­rate soft­ware to col­lect loan ap­pli­ca­tions on dif­fer­ent chan­nels, with one for your call cen­ter and branches, an­other for your in­di­rect lender, and yet an­other for on­line and mo­bile ap­pli­ca­tions.

You prob­a­bly use one sys­tem for pre-ap­provals, and sev­eral more for loan de­ci­sions, dis­clo­sures and fund­ing. There are also sys­tems that quan­tify CECL re­quire­ments, while oth­ers han­dle in­ter­nal re­port­ing. And that’s just di­rect lend­ing. If you of­fer in­di­rect lend­ing, you also have to in­te­grate with dealer sys­tems.


In­te­gra­tion speed is im­por­tant, but an LOS must also pro­vide seam­less con­nec­tion to all the steps in­volved in the loan ap­proval process, from pre-ap­provals to fund­ing. The only time you should ever ask your mem­bers to sub­mit ad­di­tional in­for­ma­tion or use a dif­fer­ent chan­nel is if there is a prob­lem. This in­cludes the process for a new mem­ber.

The LOS must pro­vide the abil­ity to quickly and eas­ily com­plete the new mem­ber ap­pli­ca­tion process, which may in­clude sep­a­rate sys­tems to match So­cial Se­cu­rity Num­bers, and more.


What is of­ten over­looked in the search for an LOS is the value it should bring to your staff. Your orig­i­na­tion sys­tem might, in fact, in­te­grate with your other sys­tems, but if it re­quires em­ploy­ees to tog­gle among sev­eral screens and in­put data man­u­ally, they will likely find it very dif­fi­cult to em­brace. And if your LOS re­sults in ad­di­tional calls for your call cen­ter or branches, the se­nior man­agers in charge of those di­vi­sions may not be on board with it, ei­ther. The sys­tem isn’t just about the mem­ber ex­pe­ri­ence it pro­vides – your in­ter­nal team must also ben­e­fit from it.


Mem­ber ex­pe­ri­ence and in­te­gra­tion with your dealer net­work are es­sen­tial. How­ever, you should also make sure your LOS has the abil­ity to lever­age ex­ist­ing data into growth. Which mem­bers are ready for ad­di­tional loans? Which mem­bers are likely to be en­ter­ing a new life stage with dif­fer­ent lend­ing needs? And does your LOS pull per­for­mance data and use it to im­prove your un­der­writ­ing and pric­ing?

It’s im­por­tant to re­mem­ber that a strong loan port­fo­lio isn’t built upon a shot­gun ap­proach; ac­cess to data, and lever­ag­ing that data, al­lows you to tai­lor your new loans to fit your goals.


Com­par­ing sys­tems can be an over­whelm­ing process. Be­fore be­gin­ning your search, set­ting a per­for­mance base­line will help you nar­row po­ten­tial ven­dors to just those that meet your needs. The fol­low­ing per­for­mance ca­pa­bil­i­ties should be top of

mind when choos­ing a new LOS.


Suc­cess­ful im­ple­men­ta­tions take time, but ev­ery month you op­er­ate on your old sys­tem, you’re leav­ing money on the ta­ble.

Ven­dors that prom­ise sig­nif­i­cantly shorter im­ple­men­ta­tion times might not be fully in­te­grated with other sys­tems. Longer im­ple­men­ta­tion times may ham­per your abil­ity to meet growth goals. Con­duct your due dili­gence and seek feed­back from CU col­leagues who have con­verted to the sys­tems you’re con­sid­er­ing.

A mod­ern LOS must have the abil­ity to col­lect an ap­pli­ca­tion, move to a sys­tem de­ci­sion and book the loan in a mat­ter of min­utes or less.

Your LOS should have the abil­ity to grow loans by up­load­ing mem­ber files with ap­proved in­for­ma­tion, al­low­ing staff to search by So­cial Se­cu­rity Num­ber to eas­ily process the loan re­quest.

Gone are the days when mem­bers need to wait for ap­proval and lend­ing man­agers spec­u­late if pre-ap­provals are be­ing priced cor­rectly.

Your LOS needs to pro­vide an op­por­tu­nity to cross sell other prod­ucts as part of the loan process.

To pro­vide a truly pos­i­tive mem­ber ex­pe­ri­ence and win staff sup­port, the LOS must re­duce tech­nol­ogy sprawl. Make sure the so­lu­tions you’re con­sid­er­ing meet these three min­i­mum re­quire­ments:

* It must fully im­ple­ment with all sys­tems, not just the core

* It must pro­vide an en­riched mem­ber ex­pe­ri­ence, and

* It must in­crease op­er­a­tional ef­fi­ciency.

To en­sure your cap­i­tal in­vest­ment con­trib­utes to all of your or­ga­ni­za­tion goals, an LOS must also build a strong foun­da­tion for the fu­ture, grow­ing mem­bers and loans with a ro­bust ac­count orig­i­na­tion fea­ture.

Brit Barker is vice pres­i­dent of credit union so­lu­tions at CU Di­rect.

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