The reality of the credit crunch for financial institutions is tightening of loan criteria and more loan denials. It stands to reason that with more denials that credit unions are going to have to look at more loan applications to maintain and grow their existing loan portfolio. This is an operational challenge because more applications will require more work and personnel. Savvy credit unions are looking to automation to increase the application throughput and increase their ability to auto-approve based upon consistentcriteria that can be managed within anautomated system. The automated approach allows loans to be reviewed and underwritten with limited hands-on review and therefore is more productive. It’s one way to address the need to increase volume.
Another way involves opportunity. If the market is denying more loans, there is an opportunity for credit unions looking to serve more members and collect a higher yield. They must be willing to accept some risk but there is opportunity with a well thought out risk-based pricing strategy and the use of technology. The majority of credit unions do not auto-deny loans. Loans that do not meet their initial credit requirement are kicked out for review by a loan officer. Auto-approval takes seconds whereas a denial could take a loan officer 30 minutes or more to evaluate the true opportunity. We have made the case that the credit crunch means more denials. More denials will mean more manual review. Without automation, such as loan origination software, additional review will drive costs up and there may be opportunity cost at stake.
A couple of key suggestions are to: 1) conduct a review of current multi-channel processes and lending criteria; and 2) carefully consider an automated Loan Origination Software (LOS)system and the potential impact on the lending program. Automation, provided by these solutions, is helping financial institutions maintain and grow.
Teres Solutions, Inc. was founded in 2002 to help credit unions and lending CUSOs turn their lending programs into highly profitable and efficient lines of business. The company’s executive team has over 60 years of combined experience in the financial industry. By providing software products that automate loan processing steps to increase the productivity of lending staff, Teres Solutions is enabling financial institutions to quickly expand their multi-channel lending businesses in a cost-effective and efficient way.
To discuss your automation needs: contact us 1-866-518-4200 x 1 or visit us at www.teressolutions.com.