DPA leverages artificial intelligence and machine learning to deliver a faster, more seamless loan process.
Sponsored by Origence, a CUES Supplier member
In the ever-competitive landscape of indirect lending, credit unions are constantly seeking ways to enhance their operational efficiency, improve member satisfaction and solidify their position as reliable auto financing sources. To achieve these goals, credit unions are turning to cutting-edge technology solutions, and one tool stands out as a game-changer: document processing automation. By leveraging the power of artificial intelligence and machine learning, DPA is reshaping the way credit unions approach indirect lending. Here are five key ways DPA elevates indirect lending for credit unions.
1. Accelerated Loan Processing
In the fast-paced world of auto financing, speed is of the essence. Members expect quick decisions and seamless experiences. DPA revolutionizes the loan origination process by automating the classification, analysis, and extraction of data from complex and unstructured documents. This includes pay stubs, W-2s, financial records, member applications, insurance policies and vehicle service contracts.
With DPA, what used to take days can now be accomplished in a fraction of the time. AI-powered tools equipped with fuzzy match logic can recognize patterns and similarities in text and data, even in cases of variations or discrepancies. This means that DPA can swiftly process more than 250 types of loan jacket documents and more than 45,000 document subtypes. For credit unions, this translates into the ability to meet member demands promptly, reinforcing their reputation for exceptional service.
2. Enhanced Accuracy
Inaccuracies and errors in the lending process can lead to financial losses and member dissatisfaction. Traditional manual processes are often susceptible to human error and inconsistencies. DPA, on the other hand, introduces a new level of accuracy into credit union operations.
AI algorithms in DPA adhere rigorously to predefined rules and guidelines, ensuring impartial and consistent decision-making for every loan application. For example, DPA automates the calculation of income using various documents, such as check stubs, W2s, and other proof of income documentation. By measuring this calculated income against the stated income provided on the loan application, the lender can ensure a high level of accuracy and efficiency. Unlike manual processes that can vary in quality and consistency due to factors like the day of the week, time of day, and interruptions, DPA operates with unwavering precision, diminishing the error rate found in manual review.
Furthermore, DPA excels in detecting fraudulent documents, a critical capability given the prevalence of income and employment fraud in the auto lending industry. In 2021 alone, auto lenders faced nearly $5 billion in losses due to such fraud. DPA can also be an important tool to help identify forged pay stubs and fake documents, combating fraud, which addresses the concerns many lenders have today.
3. Faster Funding for Better Dealer Relations
Strong relationships with dealerships are pivotal to the success of credit union auto lending programs. DPA plays a crucial role in nurturing and fortifying these relationships by expediting loan funding processes. From the dealer’s perspective, reducing the contract-in-transit time results in lower holding costs and improves cash flow, directly impacting the dealer employee incentives. When dealerships experience a swift and efficient funding process, they are more likely to choose the credit union as their preferred lending partner.
These enhanced dealer relations translate into several benefits for credit unions. They gain increased leverage, which can result in an improved portfolio mix and more competitive terms for their members. Moreover, when credit union staff can redirect their focus from mundane data entry to building deeper connections with dealerships, it opens opportunities for collaboration and growth.
4. Operational Efficiency
Operational efficiency is the cornerstone of a successful lending program. In reviewing auto count data on an ongoing basis, it is clear that many credit unions are taking seven to 10 days to fund their dealers. If a credit union isn’t funding in 24 to 48 hours or less, it should be looking to improve its efficiency. With DPA in place, credit unions can not only streamline operations and optimize resource allocation but also efficiently manage volume peaks from dealers. This means that even during periods of high demand, DPA ensures that overall cycle times remain minimally affected. This level of adaptability makes DPA an invaluable tool for growth, as credit unions can handle increased volumes without incurring a proportional increase in overhead costs.
Moreover, DPA doesn’t stop at optimizing resource allocation; it also minimizes the need for manual document sorting and categorization. This, in turn, frees up staff to focus on such higher-value tasks as building relationships with members and dealerships. By automating time-consuming processes, credit unions can handle more loan applications without compromising quality. This not only enhances efficiency but also reduces operational costs and improves the bottom line.
5. Member-Centric Approach to Indirect Lending
Credit unions have always prided themselves on their member-centric approach. DPA enhances this commitment by enabling credit unions to serve their members with greater efficiency and accuracy. Members benefit from improved accuracy in the lending process and a smoother, more convenient experience.
When members experience a seamless lending process with their credit union, they are more likely to remain loyal and recommend the credit union to friends and family. This word-of-mouth marketing can lead to increased membership and loan volume, contributing to the credit union's overall success.
As credit unions continue to navigate the ever-changing landscape of auto financing, those equipped with DPA capabilities are well-prepared to lead the way, ensuring their continued relevance and prominence within their communities. In the dynamic world of indirect lending, DPA is not just a tool; it's a strategic imperative that paves the way for a more efficient, accurate and member-focused future for credit unions.
Aleks Bogoeski is SVP/product strategy and partnerships for CUES Supplier member Origence, Irvine, California.