WASHINGTON–An estimated 17.5-million vehicles sold in the U.S. during 2015. Tony Boutelle wants credit unions to instead think of the number four—as in four words.
“One thing we are really trying to get credit unions to do in 2016 is to ‘get to yes faster’,” said Boutelle, CEO of CU Direct. “You can get enamored with other things, but the whole world has become very impatient today. We want to create an offer for people who do not want to wait. We’re not saying you shouldn’t go deeper to get loans, but 40% of approvals last year on the CU Direct system took three hours or longer.”
When consumers are in an auto dealership and looking to buy, time is everything—as it is for the dealer, too. That’s why quick approval is so critical, stressed Boutelle, especially when a credit union has all the tools it needs to provide the fast response to get the paper.
“Credit unions need to rally their employees to really measure that and to reward staff for getting to yes faster,” Boutelle told CUToday.info during CUNA’s recent GAC. “We need to trust the investment in technology. Credit unions spend big time on (loan origination systems) and then don’t use it to make loans. We have to meet the expectations of members. This is the first pain point.”
Boutelle said one credit union with which CU Direct worked had just a 3% automated approval rate. With just a bit of work, that soon went to 48%.
Why The Lack of Faith?
Why do CUs lack faith in technology?
“It’s not that, it’s a multitude of things,” responded Boutelle. “There is compliance. Some credit unions are more controlled by compliance officers than loan officers. Technology is another issue. And then there is the ‘we’ve always done it that way’.”
Boutelle said some CUs can get bogged down in disclosures even though no one ever reads them and everyone just clicks “agree.”
Boutelle said credit unions running the CU Direct platform can get approvals in five seconds, and that’s with 1,200 variables as part of its decisioning engine that is used by more than 700 credit unions.
He said many credit unions continue to ask for more and more decisioning powers, which they then set and forget even though they need to be mindful of checking the parameters on an ongoing basis. “They need to see if the decisions being made are really impacting losses,” said Boutelle. “Why do you have this one rule if you do not have any losses?”
One interesting note shared by Boutelle: A standby of many credit unions’ criteria, debt-to-income ratios are poor predictors of a loans performance.
Taking Longer Than Banks
Boutelle said auto dealers have told CU Direct that credit unions often take longer to approve a loan, and that can lead to those loans going to other lender.
“The concept is not to take on more risk; it’s approving the same loans, but just not taking as long,” said Boutelle.
And that brings him back to his main point.
“Our theme for the year is ‘Get to yes faster.’ It will improve funding ratios of every credit union. Time is a metric every credit union has. Most credit unions are in the 60% (automated approval) range, but there are a lot of credit unions at 10% to 20%, and then there are some in the 90% range,” said Boutelle. “Many of those in the 90% range have preapprovals in our system waiting. Another way to get to yes is to have members preapproved so you don’t even need to pull a Vero. I do believe we’ll make progress this year.”
Two Other Notes
Two other notes shared by Boutelle:
- The company’s new OnSpot Financing, a medical and retail lending service for CUs, has now connected the offering to a credit card. Rollout has just begun, and Boutelle said it’s “going to take a while.” He noted “the margins are there (for CUs), but so is the competition. “There is a wide group of industries and we have signed up a lot of credit unions, but the margins are thin for us,” he said.
- Intuvo, which CU Direct purchased in 2015, is now fully into its efforts to convert members obtained via indirect loans into multi-product members. He said recent email efforts to reach those members have seen a 60% open rate. “Credit unions really good at the cross selling, but have spent an enormous amount of time calling those new members. Now, no one wants to answer a phone call.”