Posted by Liz McBrayer on Wed, May 16, 2012 @ 10:08 AM
With any type of lending program, there are the nice-to-haves and the must-haves, and an indirect lending program is no exception. To have a successful indirect lending program, here are the three critical components you should focus on:
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Relationships with Dealers – Dealer relationships, like any business-to-business relationship, are driven by trust and experience. When you’re building a network of dealers to funnel loan applications to your institution, you need to make sure you have the ability to form a strong relationship with each dealership’s staff. And it isn’t enough to just build a relationship with the F&I staff; make sure you take the time to get to know the sales manager and the principal or owner too. Dealerships are large and complex organizations, and getting to know the staff and gaining an understanding of the work they do and the stress they face goes a long way in gaining a great resource for auto loans.
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Consistent Buying - One of the most important aspects of working with dealers is that they feel comfortable sending an application your way. The easiest way to achieve this level of comfort is to follow the program that you promoted to them. Keep in mind that most dealers have anywhere between 20-50 lenders that they can send applications to. So, if you promote a program to them and they submit applications within the program outline, but you then decline, condition or counter every application that comes through, the dealer will very quickly move on to another lender. Also, if you have multiple buyers, make sure there is consistency between them. The bottom line is, if you buy an application on Tuesday, you need to buy that same application on Wednesday, Thursday, Friday or Saturday. If you won’t, your institution becomes too risky for the dealer, and they will simply turn to your competition.
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Efficient Funding – This is critical. Following the recent financial crisis, creditors have tightened up on the floor plans issued to dealers. So dealers need the money for every funded loan as quickly as possible. This means, in part, that contract compliance issues need to be resolved quickly – granted they originate at the dealer, but your staff should be responsive to any issues that arise and work with the dealers to clean up those issues promptly. Once contracts are ready to fund, get the funds to the dealer as fast as possible. The executives of the dealership aggressively manage their receivables and if you as a lender are aggressive when it comes to getting their money to them, you gain an incredible competitive advantage when it comes to application capture at the dealership.
Want to see an indirect lending program in action? Download our case study now.
Posted by Liz McBrayer on Tue, May 08, 2012 @ 09:07 AM
When it comes to technology, getting the right answers and the right solutions to meet your needs often depends on asking the right questions. So, if your financial institution is embarking on a search for a new – or your first – loan origination system, what are the crucial questions you need to ask to help ensure you get the system that’s right for you? Here are 10 questions we suggest:
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Should I use an ASP or host my own system? And if I use an ASP, will I have my own database or is it shared? What are my reporting abilities through an ASP? ASPs have come a long way and many banks and credit unions are moving from on-site solutions to ASPs. In many cases, you will still have your own database with an ASP and direct reporting capabilities, and an ASP gives you some great benefits including no hardware to purchase, no need for internal staff to administer the system and monthly subscription pricing in place of large upfront costs. Ask your potential LOS provider what their ratio of ASP to hosted customers is to get a feel for what they’re most prepared to support.
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What are the technical, hardware and IT staff requirements to host my own system? This is particularly important if you choose to go with a site licensed system. You will need to have IT experts that are familiar with the hardware and software that your new system requires. For both ASP and site license, you’ll want to make sure you have someone trained to use their reporting tools to create your own reports, and that a business user will be capable of administering the system in other ways, from credit policy configuration to setting up your online application.
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Does my system need to support online lending and accounts? Many loan origination systems will provide an online application that you can plug right into your institution’s website. Make sure it supports the products you need and allows you to customize it to fit your brand and suit your changing needs. Some can return loan documents to the consumer for printing or eSignature. A similar online application may also be available for your independent dealers and merchants to use.
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What other systems does it need to connect to? Make a list of the other systems – such as ones for servicing, documents and imaging – that will either need to feed information into your LOS or that your LOS will need to pass information to, or both. Make sure your vendor has an integration already or is willing to create it for you at a reasonable cost and with a reasonable time frame. Consider being open to document solutions, settlement service solutions and other ideas that your vendor may suggest. Chances are, if the LOS vendor has coded an interface, it’s a good vendor to consider.
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Will the system support my institution’s volume as it grows? Try to forecast your growth over the next five to ten years, and then make sure your LOS provider has other customers that run those volumes. Also consider the states and territories you do business in currently and plan to in the future, and make sure they are well equipped to handle documents, regulations and even credit files in those areas.
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How configurable is the system? What kind of administrator is needed? Business? Technical? Ideally, you’ll find a system that a business user can configure and make changes to as needed. Particularly if you are using an ASP, you should need very little, if any, technical expertise in-house. If the system is highly configurable (which is great), make sure you have access to a specialist when you have questions and that good training and help are available.
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Will I be able to influence the product roadmap? How? Your LOS provider should provide you with several forums for providing system input. Ask about the availability of user group calls, steering committees and user conferences. Also ask how to submit enhancement requests and how those requests are managed.
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Are there other institutions with similar needs on this system? If your business type or size is not within a potential LOS provider’s target market, new features are less likely to meet your needs than they are of those within that target market. Product managers will be looking to add features that both advance new sales in their target market or satisfy many existing customers. You don’t want to be the “one off” unless they are specifically taking the product in the direction of your institution and will allow you to help direct the features for that market.
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Does it support scorecards? What kinds? How easy or difficult is it to implement them? How costly is it? Scorecard implementation and monitoring can be real pain point for banks and credit unions. Ideally, your LOS provider will have some pre-built scoring solutions that you like and a way to monitor the performance of those scores. This is a good time to revisit your scorecards and explore newer, better options.
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What is the cost/benefit of more expensive system to a less expensive one? Really consider the ROI of your new system. For every process that you automate, the fewer people you’ll need to hire to support your loan growth. How much faster can you grow your portfolio with good cross-selling and new channels supported by the LOS? Does the DealerTrack or RouteOne interface support business loans too, for example? What can you save in shipping by using eSignature with your new LOS? How can a better scoring system allow you to buy more loans with the same or less risk?
Click here to learn more about loan origination systems available on the market today.
Posted by Liz McBrayer on Thu, May 03, 2012 @ 01:44 PM
Do any of these business objectives sound familiar? 
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Effectively manage different lines of business with unique process flows and decision logic
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Support multiple products with complex approval strategies
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Reduce risk and improve profitability
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Reduce turnaround time and improve the customer experience
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Centralize core system processes in order to gain efficiencies in internal subject matter expertise
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Focus on business partnerships that provide the most return on investment
If so, you might want to consider a configurable loan origination and decisioning solution.
When determining whether a configurable loan origination and decisioning solution is right for your financial institution, you may want to ask yourself the following:
1. Does your company’s culture encourage and support continual process improvement?
One of the biggest benefits of a configurable loan origination and decisioning solution is the opportunity to fine-tune the business and decision processes to maximize efficiencies and profits. In order to leverage these benefits, however, your organization has to support a controlled, but steady, stream of change. To realize the full value of your investment, you have to avoid being reluctant to apply changes that will improve automatic decisioning rates, increase the consumer’s experience and reduce risk.
2. Assuming the culture is poised to support continual process improvement, do you have an infrastructure in place to execute it?
The configurable solution you choose should include an integrated business intelligence tool that provides insight into the business process and highlights potential bottleneck areas. Likewise, the BI tool should easily import performance data so you can see the impact of current decision strategies or their challengers. Once the analysis is complete, trained resources can work to fine-tune the configuration processes and deliver them for testing and implementation.
3. How knowledgeable are your resources?
Having knowledgeable resources who understand how to efficiently configure a modification is a critical element. The benefits of a configurable solution rest in the operator’s ability to quickly and accurately apply the specified modification. Let’s face it; if it can’t be done quickly so you can reduce the time to market or promptly realize an improvement, you’ve lost one of the main benefits of a configurable solution. It’s so important to train the resources who will be applying the configuration changes and to keep them busy so they don’t lose the subject matter expertise they’ve learned.
4. Do you fear change?
The functionality to effectively and efficiently validate and test configured changes ranks up there as a mission critical requirement. People make mistakes. Errors will be made when configuration changes are applied. Should that alarm us? Absolutely not! Why not? Because a quality configurable decisioning solution will include many features for testing and validating the changes you’ve configured and have solid version control management.
Are you ready to learn more about whether a configurable decisioning solution is right for your institution? Click here to discover more about the benefits of configurability.
Image credit: Colin_K
Posted by Liz McBrayer on Thu, Apr 26, 2012 @ 09:19 AM
Manual or automated? It’s a question that financial institutions ask themselves in relation to a wide variety of their processes. When it comes to the lending process, there should really be no question, though, because utilizing loan software delivers big benefits to banks and credit unions.
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Improve efficiency – Every aspect of the loan origination process from capturing a new application to decisioning to loan processing to reporting and tracking is more efficient with the use of a loan origination system. Applications that come in from indirect dealers or online, for example, don’t have to be keyed by your staff. And, application decisioning becomes much faster when the system points out problem areas to the underwriter rather than having them peruse the entire application and credit file every time.
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Manage credit risk – When all applications are captured in a system, you can greatly simplify your ability to manage credit risk through consistent decisioning, override tracking and reporting to identify how your credit risk strategy is performing and which aspects may need to be adjusted.
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Ensure compliance – Most lending systems today have built-in credit compliance including Reg B, Reg Z, HMDA data capture and reporting, FCRA and more. Whether it’s capturing required data on the front end or automatically generating appropriate disclosures and documents, systems today can help make the loan process foolproof from a regulatory perspective.
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Increase market share – Loan software can help you easily open up new channels by providing convenient sloutions like indirect lending interfaces or an online application. Such systems can also help you grow into new markets quickly and easily by deploying credit policy standards that you define for those new markets and easily rolling those standards out to new branches via the Internet. Automated decisioning further increases market share by giving you the competitive advantage of providing a loan decision within seconds through indirect channels or online, ensuring that good loans are booked by your institution.
To learn more about how one financial institution streamlined their lending processes utilizing consumer loan software, download our case study.
Posted by Liz McBrayer on Wed, Apr 18, 2012 @ 02:23 PM
Decision analytics provide insight into consumer behavior and give financial institutions the ability to quickly respond to changes in those behaviors and rapidly address regulatory demands. Given benefits like those, it’s little wonder that many banks and credit unions are anxious to get decision analytics up and running in their institutions. But before you get started, take the time to learn about five of the potential pitfalls commonly associated with analytics and how to avoid them.
1. Don’t Fall for Common Analytic Assumption Fallacies
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Don’t presume that your generic score vendor performs validations that satisfy regulations – many generic scores are validated initially, but then validated irregularly, if at all.
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Every lender is different, so don’t focus too much on industry benchmarking.
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Don’t presume that everything is okay just because you have a low default rate. That low rate could mean that your policy rules are too strict, thus inhibiting the growth of your portfolio and profits.
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Don’t underestimate the importance of analytical expertise to interpret results and design your solution.
2. Abstain from Silo Analytics
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Keep in mind that analytics is not just a report or score. A report or score alone doesn’t truly give you the insight you need to run your business.
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Don’t make policy changes based on isolated results or single decision characteristics and policy rules.
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Avoid developing solutions without any consideration of implementation. Ask yourself the following: Can you implement the solution? Can you make changes? Do you have the environment to efficiently test changes and implement the changes quickly?
3. Don’t Try to do Everything All at Once
4. Don’t Focus on Pieces
5. Don’t Forget Deployment
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Keep in mind that you must be able to act on findings.
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Technology is an important part of an analytics solution, but don’t choose your solution based on technology alone.
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Don’t leave everything up to the IT department – play an active role in your decision analytics solution.
See firsthand how one institution avoided these pitfalls for analytics success – click here to download the case study now.
Posted by Liz McBrayer on Wed, Apr 11, 2012 @ 02:02 PM
An indirect lending program is one of the most effective ways for credit unions and banks to grow their loan portfolios. But for some financial institutions – perhaps because of constraints on time or staffing resources – establishing such a program can be nearly impossible to achieve internally. That doesn’t mean that your indirect lending dreams can’t become a reality, though – outsourcing an indirect lending program is a very viable option with great benefits, including:
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Managing Costs - When you outsource your indirect lending program, you don’t need a large internal head count to have a robust program. You also don’t need to spend money on a technology system to support your program; with outsourcing, the technology and the service are both included. Without the cost of staff and a lending system, you can earn more overall yield on your auto loan portfolio.
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Focusing on Growth – Every type of lending program requires day-to-day attention, including indirect lending. When you outsource your indirect lending, however, you don’t have to worry about the daily processing functions associated with an indirect lending program. That means you can spend your time focusing on growing your program via marketing, dealer incentive programs and other indirect lending growth strategies.
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Easily Navigating Changes in the Economy – Outsourcing an indirect lending program is a great way to weather uncertain economic times. With outsourcing, you don’t have a large internal staff to worry about if the market takes a turn for the worse. Conversely, you also don’t have to worry if the market booms, because there are economies of scale with outsourcing that allow you to not be affected from a resource and technology perspective like you would be if you ran the entire program in-house. You also get the power of a partnership, and can leverage the combined expertise to compete at a higher level, in good economic times and bad.
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Stricter Adherence to Program Policy – When you outsource, your vendor should be facilitating your indirect lending program. That being said, they don’t have the decision-making bandwidth with your credit policy that you would have internally. So there is a much stricter adherence to your credit policies, which will make your examiners and your compliance staff happy, and will result in a higher performing portfolio.
To learn about the success one credit union had with outsourcing their indirect lending program, download our case study now.
Posted by Liz McBrayer on Thu, Apr 05, 2012 @ 07:43 AM
Cross-selling is one of the biggest names in the profitability game in financial institutions today, and a loan origination system can help tremendously. An LOS can utilize all of the information you’ve just captured for a new loan request to offer the perfect additional loans or accounts right at the time that the customer is engaged with you. And just as your new customer is happy to have been approved and has accepted their new loan, you can offer them other pre-approved products to expand the relationship. And also keep in mind that cross-selling allows you to:
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Create a long-term “sticky” relationship by serving your customers or members with multiple products. There’s a saying that goes, “If you don’t ask, the answer is always no.” So, ask your customers what they need through cross-selling, and improve your institution’s chances of your customers leaving with more than just a single product. Use cross-selling to achieve your institution’s goal of handling all of your customer’s financial needs.
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Maximize interactions with customers. Even in the age of Internet banking and multiple ATMs on every corner, customers still value face-to-face interactions with their financial institutions, and so too should you value that time. In addition to using these interactions as an opportunity to showcase your customer service, use cross-selling to take advantage of each sales opportunity.
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Provide the expertise the customer is looking for. Every sales opportunity that cross-selling presents to you is also an opportunity for you to find the right product to suit the customer’s unique needs. Just be sure to avoid a one-product-fits-all mentality. Instead, use what you know about them from their application and their credit file to offer the right products at the right time at the right price to maximize the changes they will accept and even make them grateful for such a great offer. As an example, you could capture their primary account business by cross-selling a checking account on a loan product and offering a discounted rate on the loan when they accept the checking account offer.
Efficient cross-selling isn’t the only benefit a loan origination system can provide you. Click here to learn more.
Posted by Liz McBrayer on Wed, Mar 28, 2012 @ 09:05 AM
Intelligent lending and credit decisions are the result of acquiring the right information on your customers and using it in the right way. Credit attributes are the cornerstone of this process, and while there’s a lot to be said for using industry-standard attributes, there’s also a great case to be made for configuring your own credit characteristics in decisioning solutions. Here are three benefits:
1. Control
Configuring your own credit attributes gives you the power to answer all of your “who, what, where, when and how” questions. You have the independence, the autonomy, and all of the decision-making power in your hands – what characteristics you want to create, where they will be used in the lifecycle of the application or subsequent loan management process, when you create them and how quickly you implement them. As for the question of “who?” That’s an easy one. It’s you – someone who knows your business and understands your culture, day-to-day operations and demands.
2. Innovation
With a designer tool for configuring your characteristics, you get your own sandbox to design characteristics and test the impact they will have on your decisioning strategies before ever presenting them as a possibility. Imagine that you’ve been assigned the task of analyzing the most recent write-offs and you’ve discovered some commonalities that, if detected during the application decisioning, could have prevented these applications from being booked. But, you’re not 100 percent sure of the overall impact of your assumptions. You could quickly configure the attribute or set of attributes you have in mind and use archived data to test that theory before putting the concept into action.
3. Auditable
Almost everyone dreads an audit. Tensions run high as extra responsibilities are added to already busy work days, and it often means long hours and days preparing for and answering questions before and during the audit. And no matter how controlled a process may be, some piece of documentation always seems to get misplaced or wasn’t completed. Using a self-documenting, configurable design tool for characteristic creation eliminates all of these headaches. Everything you’d want to know about that characteristic is stored and easily found and viewed within the design tool. You can quickly find out who created the characteristic, when and why, as well as when was it updated and by whom along with the detailed summarization logic. After all, once an auditor questions the final decision on an application, that’s when the proof needs to be presented and often where extensive time comes into play. If you can unveil the decision logic used to render the final decision, that typically answers most questions. But what about when they need to see the logic that’s behind the characteristic that’s being used in the decision logic? How quickly can you find and communicate that to the auditor? With a configurable attribute design tool, it could be a matter of seconds! No more long hours, no more tension – just easy-to-find answers.
Click here to learn more about how configurable business processing solutions can help you work more efficiently, quickly respond to market changes and increase your institution’s profitability.
Posted by Liz McBrayer on Wed, Mar 21, 2012 @ 01:35 PM
This year’s theme for the 2012 CRIF Lending Solutions Forum is “Elevated!” and we’re applying that theme to every aspect of the Forum. Here’s what you can expect from our Forum tracks, each designed to elevate your understanding of the topics, solutions and ideas presented therein.
CRIF Achieve Track
No matter the size or type of financial institution, the expectations for self-governance are elevated. And changing consumer behavior and economic conditions present elevated challenges – as well as opportunities to grow your portfolio and earnings. To manage these challenges and opportunities, analytic decision management is a necessity. This series of case studies, presentations and roundtables demonstrate how CRIF Achieve analytics can be your GPS to navigate through today’s examinations and to explore uncharted growth opportunities.
CRIF ACTion Division: ACTion LOS Track
Sessions focus on the important features and benefits of the CRIF ACTion LOS system for current users and for those interested in converting to the product. New product features as well as specific product functionality such as report writing, workflow and automated decisioning take center stage. ACTion Online and ACTion Business will also be discussed in detail.
CRIF ACTion Division: LoanCenter Track
Discover how to best leverage the features and functionality of LoanCenter to get the most out of your system. Track sessions will focus on a wide variety of topics including best practices for site license clients, efficient underwriting and post-approval processing, and indirect lending. A special feature of this track will be a comparison of the LoanCenter and ACTion LOS products.
CRIF ACTion Division: Mark IV and BizMark Track
The primary focus of this track is our Mark IV and BizMark products, with sessions including upcoming compliance issues, scoring analytics, future enhancements, product demonstrations and indirect lending. A continued staple of this track will be the product user roundtable sessions, which have been expanded this year based upon client feedback.
CRIF ACTion Division: SAIL Track
Elevate your use of the SAIL system with a broad range of advanced product training including multiple automated decisioning configurations, configuring an automated decision engine, custom queue and pre-approved cross-selling techniques, merchant lending and administrative support help. A client roundtable rounds out the offerings.
CRIF Synergy Track
Maximizing your CRIF Synergy product investment to elevate your company’s profits is the overriding theme of this track. Data provider information, analytics infrastructure, product direction roundtables and business case studies will be presented. This track features advanced hands-on training sessions on CRIF Synergy products.
CRIF Select Client Symposium
This one-and-one-half day mini-Forum is made specifically for CRIF Select clients. The program will feature a roadmap for all tools and services, strategic objectives and a special dealer interactive roundtable. Participants will also have the opportunity to visit the CRIF Select office in Denver for in-person service demonstrations and a staff meet-and-greet.
CRIF Select Indirect Lending Track
This track is designed to create a greater peer experience as it relates to your indirect lending program. Sessions include an open roundtable on indirect lending, successful dealer management and an overview of CRIF Select tools and services. Attendees will also have the opportunity to participate in a special interactive dealer roundtable. (This track is open to CRIF Select clients and other interested Forum attendees.)
CRIF Lending Solutions Product Demonstrations Track
Demonstrations of software from the CRIF Synergy and CRIF ACTion divisions give you the opportunity to see first-hand the capabilities of each of the primary software solutions CRIF Lending Solutions offers. Products slated for demonstration include the ACTion LOS system, Mark IV, BizMark, SAIL, CREDICHECK, RapUP, StrategyOne and CreditFlow.
Stay tuned to the CRIF Lending Solutions Blog for Forum updates, and click here to register today.
Posted by Liz McBrayer on Thu, Feb 02, 2012 @ 01:33 PM
Providing point of sale financing, or merchant lending, to local retailers is a great way for financial institutions to tap into a new source of revenue and develop profitable loan relationships. Customers get financing when they need it. Merchants and service providers get higher customer conversions with the benefits of a local lender. And you reach new loan customers. Everyone wins!
Merchant lending also allows lenders to:
• Offer consumer financing for numerous types of loans with flexible finance terms
• Deliver 24/7 instant financing
• Increase volume of loans from a new market
• Expand their loan portfolio
• Increase revenue from higher yield loans
• Develop relationships with local merchants and service providers
• Engage new customer relationships for cross-selling opportunities
Despite the many benefits of a merchant lending program, some institutions can find it difficult to know how and where to get started with getting retailers signed up and on board. And that's why we created our Merchant Lending Getting Started Checklist - to help you create and maintain a successful merchant lending program.
Download our checklist today and follow the steps for success with merchant lending from the very start!
