200% growth in instant decisions with AI fraud detection

As a mission-focused financial institution, Wauna Federal Credit Union strives to help their members achieve their dreams. So, when the team learned partnering with Zest AI would allow them to say “yes” more often, they went all in on AI-driven underwriting.

Then, as part of their automation journey with Zest AI underwriting, the Wauna team heard more about Zest Protect, an AI-powered fraud detection solution that helps distinguish potential fraud from legitimate borrowers. By providing a clearer path to verification, Zest Protect helps the team approve more legitimate borrowers with confidence.

“Zest AI’s underwriting gets you your yeses and allows you to auto-decision and deny any applications that are clearly deniable,” explained John Moore, Chief Revenue Officer. “But Zest Protect allows us to get to the yes-ifs.”

Zest Protect helps financial institutions identify origination fraud using data and proven, industry-leading AI. By tapping into thousands of data points and using custom models, lenders get precise risk scores across all fraud types; detection that is updated to capture the latest fraud patterns and trends; and analysis of portfolio impact.

But in addition to this information, Wauna found Zest Protect helped them grow their loan portfolio and automation. According to Moore, instead of triggering manual underwriting rules, Zest Protect helps Wauna reach a decision quicker by homing in on one piece of necessary information, like a pay stub or proof of identity. It operates in a trust-but-verify environment, where it assesses an application, flags it if it feels it’s a contender for approval, but requires manual verification to ensure applicant information reflects reality.

“What I found is that we're able to do more loans and help more people—especially those that have complex credit histories,” shared Moore.

By using Zest Protect, Wauna has confidently been able to approve more loan and credit applications. For example, Moore points to massive growth in instant, secured consumer loan approvals: With AI-driven underwriting alone, the credit union grew this area 100%, but once they added Zest Protect, they were able to climb another 160%. For overall direct lending, the team doubled in volume, resulting in $1M more loans year-over-year after adding Zest Protect.  

“What Zest Protect did was help us reevaluate old models that triggered manual underwriting,” said Moore. “Now, we have removed some of those barriers, and Zest Protect will say, ‘Hey, do it! Fund this loan if details match up.’ Our loan officers get so excited when they get to say ‘yes’, and Zest Protect has been a real game changer for us.”

Demonstrating the ‘protect’ in Zest Protect

In addition to opening up more funding opportunities, Zest Protect has earned its name with Wauna by literally protecting the institution and its members. On average, they are now catching two-to-three fraud applications a month, saving the team time in investigating false leads and avoiding the potential for fraud losses.

In addition, Moore pointed to a specific example where Zest Protect saved the credit union from identity fraud. A non-member's $2,500 loan request came in, and an initial assessment showed a platinum-level credit rating. To the human eye, it was a straightforward approval, and one that would bring in a new member, but Zest Protect saw anomalies in the application, and it directed the team to verify the person’s identity. When the loan officer dug deeper, she uncovered that the individual attempting to take out the loan was not who the application said he was. The Wauna team then contacted the person who was on the application, helped him lock down his credit, stopped the identity fraud, and protected him from financial loss.

“The great news is that while he couldn’t become a Wauna member because he wasn’t in our footprint, he became a big believer in the credit union model because of our support. He’s since moved his accounts to a credit union in his area. We're very excited that he's in the family now,” said Moore.

In another instance, Moore shared that they had a current member who applied for a cashback auto loan. Although the applicant was a known member and the application seemed reasonable, Zest Protect  suggested Wauna require income verification. When the team looked further into the member’s financial position by gathering income documentation, it became apparent the income amount on the application had been grossly overstated, and Wauna had to decline the loan.

Growing potential

As Wauna continues to engage with AI-driven underwriting and Zest Protect, they have set the goal of reaching 80% instant decisions on all of their loans. In a massive win for the team, home equity lines of credit (HELOCs) have gone from fully manual underwriting to 80% automated, already achieving the goal. With auto loans, Moore points out that they are very close to hitting the decision objective—hovering at about 78%—and expect a few small tweaks will make that instant approval number a reality in the coming months.

“Working with our Zest representative, there are a few recommendations that we need to implement. We think with those changes in our system—and without taking on any more risk—we’re going to hit that 80% that we want to hit, which equates to time saved,” Moore summed up.

But while time savings bring efficiencies, Moore’s excitement stems from the opportunities Zest AI affords Wauna. Moore was able to restructure back-office support and underwriting as they enhanced their systems and processes with Zest AI. That shift allowed them to move two full-time employees into loan sales roles, opening up additional possibilities for a further expansion of their portfolio.

“If you leverage Zest AI right, you're closing deals quicker than anybody else out there,” shared Moore. “Your members are having this amazing experience where they sit down with the loan officer, have a great conversation, and get approved. That equals more loans, and Zest AI has made this the norm for our team.”

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