By Brian Hamilton
With more than one-million members and 1,300 dealer partners throughout California, the $15.6 billion Golden 1 Credit Union funds 3,500 indirect auto loans in a typical month. When you have a program of that size – Golden 1 has 55 employees in its indirect lending department – efficiency matters.
Yet we have found many lenders face a number of efficiency challenges. The manual process of receiving loan packages by mail; identifying and sorting documents in the correct order; ensuring the packages are complete, and then scanning them into a loan origination or imaging system is a labor intensive and costly process that can delay loan funding time. It is an area ripe for innovation and leveraging technology.
In Golden 1’s case, it has chosen the SmartFund solution from CU Direct and then coupled that with a new document processing automation service offered by its subsidiary, CU Direct Connect (CUDC).
Golden 1 was an early adopter of this service and worked extensively to identify potential issues and assure the new service reached its optimal performance.
The objective of any solution should be to make it easy for dealers to upload loan packages. In this case, it’s done through CU Direct’s CUDL indirect lending system, creating an electronic file for the credit union. Nearly all of Golden 1’s auto dealers are already using or are familiar with the technology. If a dealer does mail a package in, CUDC will scan it into the LOS for processing.
Proprietary Solution
There is also a proprietary solution that has been developed that uses optical character recognition (OCR) and artificial intelligence (AI) to recognize, classify and stack documents in the electronic file according to the credit union’s specifications to deliver document processing automation. CUDC leverages this technology to provide stacking and validation services efficiently and affordably for lenders.
Ryan Little, VP-consumer lending with Golden 1, said the CU continuously seeks ways to improve the user experience for its members and auto dealer partners. It was imperative that any solution offered would integrate with the credit union’s existing systems, as well as those used by its dealer partners. Finally, loan quality was not to be compromised in the drive to automate.
What we have found in doing research into successful digital innovation is the key to improving member and dealer experience is optimizing processing in the back-office.
Another key is performing a preliminary audit of the loan file before sending it to the credit union, ensuring no documents are missing to complete a full loan audit. The dealer is promptly notified should a document be missing.
Process Automation
After Golden 1 launched CU Direct Connect’s document processing automation services with SmartFund, in just 30 days the indirect lending department was receiving 90% of its loan packages electronically from dealers. The result was a whopping 30% reduction in processing time per indirect loan file, according to Little.
Additional benefits have included reducing funding times by 50% for Golden 1’s dealer partners thanks to the new simplified and streamlined end-to-end loan process.
“Digitizing improved funding turn times for our dealer partners, resulting in a better buying experience for members, is a win-win for everyone,” noted Little.
Added Richard Musci, Golden 1’s executive vice president, “We completed the system roll-out in Q1 and recently celebrated a milestone with 100% of our loan packages being sent digitally.”
Supporting Work From Home
COVID-19 has forced many employers, including essential businesses like credit unions, to transition as many employees as possible into a work-from-home setting. Golden 1 said the outsourcing of the loan package digitization and audit process to CU Direct Connect was a critical piece of digital functionality the indirect lending team needed to allow staff to work remotely.
“This service enabled Golden 1 to move our entire indirect team to work from home,” Musci said. “We can now rest assured that we have reduced the exposure to COVID-19 for this team, along with the other staff now working remotely.”
The credit union reported the overall implementation process was smooth. According to Little, “Adopting any new process or technology comes with some challenges; but overall, we had a positive launch and deployment of the system.” Little concluded that the platform has surpassed his expectations in the areas of efficiency gains, dealer adoption and funding times.
Brian Hamilton is president of CU Direct Connect.