Following the economic downturn, Seven Seventeen Credit Union realized its loan origination system was not equipped to properly help refine its portfolio quality and drive loan growth. “The system we were on was from a dying breed,” says Darlene Cesta, vice president and lending manager at the northeast Ohio credit union. “The only updates we were receiving dealt with compliance and not the latest technology developments. We wanted a system with all of the latest bells and whistles to significantly shape and enhance our operations.”
With $868 million in assets and serving more than 68,000 members, Seven Seventeen is a progressive financial institution with 10 branches in Trumbull, Mahoning, Portage and Stark counties.
One of the things that Seven Seventeen noticed from the old system was that credit quality of the entire process was redundant in some spots, yet had holes in others. Cesta says they found certain things were either covered in the credit score and the rules or not covered in either. They were looking for a system that would eliminate redundancies and supplement the credit scoring model with their rules.
“We also found that some rules were overridden as much as 80% of the time by our underwriters,” Cesta said. “So we needed a system with not only more rules, but also a system we could configure to eliminate the ones that were slowing the process.”
Cesta and her colleagues discovered that the previous system lacked consistency between online decisions and others made within the system.
Besides decisioning rules, Cesta says the credit union also needed rules on the processing side of the operations. The biggest concern dealt with ensuring the loan amount was within the tolerance so they weren’t dispersing more than they should.
Increased automation was also a major factor in choosing a new loan origination system. Seven Seventeen had been using an online loan system that didn’t interface well with its core system, and it was also looking for a more robust interface with indirect lending portals such as DealerTrack and RouteOne. Cesta and her colleagues discovered that the previous system lacked consistency between online decisions and others made within the system.
After surveying the types of loan origination systems available on the market, Seven Seventeen decided that CRIF ACTion’s configurability and powerful decision engine were the right match for its loan operations and plans for portfolio growth. Seven Seventeen completed ACTion implementation in September 2012.
“Two of our top priorities were finding a platform where we could configure as many rules as needed to easily implement our credit policy, and implementing a system with a decision engine to dramatically reduce turnaround times for both direct and indirect loan application,” Cesta says. “ACTion fit our operations at every level for direct and indirect lending growth.”
The ACTion solution is a powerful all-in-one loan origination and account opening system that creates an efficient loan experience wherever a member applies by handling all sales channels, including online access, branches, call centers, and dealerships.
The highly configurable, user-friendly design allows it to provide end-to-end automated processing of all types of loans including direct, indirect, merchant, online, and business loans as well as in-branch account opening. ACTion also provides efficient cross-selling capabilities across lines of business, total relationship management, shared administration, and combined reporting.
ACTion also helps lenders stay compliant with changing regulations by providing a configurable post-approval process.
After implementation, Seven Seventeen saw immediate results. Year-over-year loan growth doubled from 4% in 2013 to 8% in 2014. Additional rules and greater general control over its credit policy led to 60-day delinquency rates being reduced by 25 basis points from 0.71% to 0.46%.
ACTion has also helped Seven Seventeen with loan pricing. “Switching to ACTion has also allowed us to do so much more with loan yields and pricing,” Cesta says. “Our pricing matrices are pretty complicated, and yet ACTion has done a wonderful job of allowing us to offer discounts for loan to value, for a membership rewards program, and for auto pay, as well as special discounts for when we run promotions.”
ACTion also streamlined Seven Seventeen’s operations by eliminating hand keying for loans acquired through DealerTrack and RouteOne. The credit union used to have two staff members input dealer applications, but now only one person handles that work. ACTion also allowed Seven Seventeen to integrate a processing task list. Cesta says this is a great feature because it guides processors with step-by-step instructions so nothing was overlooked. By not allowing someone to progress to the next step until all previous requirements were met, this functionality significantly reduces user errors.
For the deals that didn’t cash, we sent messages to each person with a coupon that offered a $25 gas card if they purchased a vehicle. This was probably one of the proudest areas for us in terms of finding new ways to increase business.
“More so for the direct side, one of the beautiful things that we did with ACTion was create custom questions for each product,” Cesta says. “We’d then use those questions to configure which documents needed to accompany each loan. That means the documents would automatically populate according to the type of loan.”
Meanwhile, ACTion’s integration with IMM for e-signature capabilities significantly reduces paperwork and increased efficiency. ACTion’s strong communication tools also allows Seven Seventeen to conduct an e-mail campaign to boost indirect lending. “For the deals that didn’t cash, we sent messages to each person with a coupon that offered a $25 gas card if they purchased a vehicle,” Cesta says. “This was probably one of the proudest areas for us in terms of finding new ways to increase business.”
Cesta said she also plans to make home equity loans an increased area of focus enabled by ACTion. This includes non-conforming equities such as purchase loans less than $100,000. “Partnering with ACTion has helped us refine our operations while at the same time raise the bar in terms of growth potential,” Cesta says. “We look forward to seeing what opportunities ACTion will help us uncover as we continue to grow.”
CRIF Lending Solutions can help any credit union streamline its lending operations to increase efficiency and drive growth. As lenders know, workflow processing is a very important part of any direct and indirect lending program. For more information, click the button below to download "The Right Loan Origination System for You Top 10 Checklist: Workflow Processing.”