Approval fast loan personal

Loan origination software is fast & flexible

New systems also help Cps strengthen member relationships

As credit unions continue to automate their processes, they're finding that even such prosaic tools as loan origination software and services are strengthening member relationships.

That's because modern loan origination software cannot only process loan applications very quicklysometimes it takes less than 60 seconds to produce a yes, no, or maybe answer---- the same technology also helps credit unions up-sell or cross-sell at the same time. Members like the idea that even if they can't get the loan they hoped for, their credit union is still willing to try to get them something.

You can divide loan origination technology into several categories. There's software credit unions can purchase and install on their own servers or on their software vendor's servers, and there are service bureaus that transparently link to credit union Web sites and handle the process on the credit union's behalf.

Some software and services are Windows-based. Others are based on browser technology that opens up access from the Internet. Typically, loan origination functions are a module or subset of a suite of financial applications, such as Harland's Financial Center, FiTECH System's ManagerGold, USERS Inc.'s Loan Origination System, Genesis 2000's Loan Origination Software Version 14, or Concentrex Inc.'s Concentrex system. Elgin, Ill.based Lending Solutionsan outsourced service-calls its loan origination technology Lender 2000.

Whatever the form, loan origination technology typically offers credit unions great flexibility in terms of designing forms and deciding which fields to show on an application, or what information to include in the forms. The technology is usually supported by large vendor databases that allow the software or service to churn quickly through credit scores and reports to produce a loan decision, resulting in the fast response time many vendors are touting.

Another variation is Interlinq's MortgageWare Entree point-of sale system-a software system that streamlines the lending process by letting loan officers prequalify members at the point of sale. With it, the loan officer can interview applicants in person, psychologically altering the application process from a form of interrogation into a friendly interview.

Emerging new features have shifted the emphasis from the raw speed of computation to an exploitation of database richness. For instance, loan origination software now "remembers" applicants' previous loan applications and uses that memory to streamline the process, says Jim Berthelsen, vice president and general manager of host services at Portland, Ore.based Concentrex.

"If an applicant has applied for a loan within the past few months, the information is already on file, so a new application may require nothing more than a name, type of loan requested, and amount requested to be processed," he says.

Credit scoring is now so sophisticated that credit unions can actually make counteroffers to applicants who don't quite qualify for the requested loan, says John Schooler, senior vice president and chief technology officer for USERS Inc., Valley Forge, Pa. "Say a member asks for a $45,000 loan to buy a Mercedes, but doesn't quite qualify. The credit union might counter with an offer of a $30,000 loan."

Credit unions' ability to do this is based on sophisticated risk-based lending algorithms accessed by loan origination software. "A credit union wants to know if an applicant has an A, B, or C rating," says Claire Stenger, marketing support manager for Atlanta-based FiTECH. "This determines whether the applicant gets the loan and at what rate. Credit unions want software to do this, and they also want the system to which the origination module is attached to be able to determine what cross-selling to try."

Despite these powerful features, some credit unions fear that loan origination software will eliminate jobs or personalized service. Actually, says Schooler, the software frees loan officers to work on relationships with "tweeners"-members whose applications garner neither a clear approval or rejection once they're processed.

"When the average cost to underwrite and close a consumer loan is $218, origination software liberates people's work by allowing them to become more productive by processing more loans," says Blake Allen, chief executive officer at FIData, the Austin, Texas, provider of ALAS loan origination software.

As a credit union gains confidence in its loan origination software, he says, its loan originations typically will soar. At first, the credit union might experience approval ratings in the 16% to 18% range. At 60 to 90 days, the rate approval jumps to the 40% to 60% range. Later, it plateaus around 70% to 80% as the software proves its accuracy and utility.

NEW DEVELOPMENTS

Allen says loan origination software isn't an entirely mature product. "In the next couple of years, there will be a real shift in functionality and customization."

Among developments will be the ability for users to update rates and underwriting rules on the fly, the use of electronic signatures (recently approved by Congress), and access to the application process from virtually any medium.

"The way things are going, the device you use to start the loan process-personal digital assistant, personal computer, kiosk, automated teller machine, even a built-in browser on a kitchen microwave-will become a nonissue," says Mike Brewington, Harland's vice president of sales and marketing. "The means of access will be generic. So the next step will be to develop operating systemindependent software that can be accessed by any medium."

Another development, Brewington adds, will be the transition to browserbased software. "We came to a crossroads two years ago at which time we had to decide whether to continue building a Windows-based application or go to a browser-based solution."

Harland's economic models convinced Brewington that an Internet/ intranet software model distributed from a central server would be up to 10 times cheaper over the life of the application than the traditional distribution of software on individual personal computers.

Brewington believes credit unions are still in the early-adapter stage of the trend toward automated, Internet-based loan processes. "Many credit unions that started with one-dimensional, information-only sites have moved to transactional sites. Some have linked generic application forms to those sites but haven't learned to connect what their members input to their back end. Instead of data being electronically collected, it's being rekeyed."

Hope Aptenhofer, Concentrex's platform products manager, predicts technology that will allow applications from remote sites. "Say you go to Home Depot and want to apply for a loan to purchase a big order of construction materials. You'd be able to apply from the store, have the loan approved, and have funds transferred to you within minutes."

Technology like this will let credit unions build portfolios without massive expenditures. It will also let credit unions customize loans to meet individuals' needs and wants. "Credit unions are no longer going to have to stick to a rigid formula or lineup of loan packages," Aptenhofer says.

Still, says Brett Beckerman, Lending Solutions' vice president of systems and technology, although loan origination software must become more adaptable, "people are looking for best-of breed solutions. No one provider can deliver every feature out there."

SOFTWARE PROVIDERS

AMI Inc., Racine, Wis., 800-558-370; www,amicusystems.com

Concentrex Inc., Portland, Ore., 800-274-7280; www.concentrex.com

CUNA Mutual Group's Lending Lab, Madison, Wis., 800-333-2644; www. cunnamutual. com

EDS, Plano, Texas, 972-604-9431; www.eds.com

FIData, Austin, Texas, 800-213-1982; www.fidata.com

FiTECH Systems, Atlanta, 404-262-2298; www.fitech.com

Genesis 2000, Calabasas, Calif, 800-882-0504; www.galaxy2000.com

Harland's Financial Center, Atlanta, 770-981-9461; www.harland.net

Interlinq, Bellevue, Wash., 800-569-1234; www.interlinq.com

Lending Solutions, Elgin; Ill.; 888-574-6572; www. nipc. com

USERS Inc., Valley Forge, Pa., 610-687-9400; www. users. com