Credit Unions

The need for speed in loan decisioning

Zest AI team
July 19, 2022
“I feel the need, the need for speed.”
-- Pete “Maverick” Mitchell

The whole world was introduced to this line in 1986. And yet, in the 35+ years since, that need for speed never quite caught on with credit union lenders. Year after year, lending worked pretty much the way it always had – slow and steady, more of a tortoise than a hare. However, in today’s hyper-competitive marketplace, slow and steady just doesn’t cut it.

Plenty has been written about the competition credit unions face from challenger banks, neobanks and fintechs. However, when it comes to creating a compelling digital experience, your credit union is competing with literally every other company that has a mobile app or website. In other words, you’re not just up against Chime and Venmo. You’re up against Starbucks and Instagram, too. Today’s consumers quite understandably judge every digital experience they have against their best digital experience, no matter what company provides that experience.

Breaking It Down

Booking a loan breaks down into two major components: decisioning and processing. Let’s be honest. As a whole, the credit union industry has not done a great job at either – at least not in terms of speed. But which is more important to the member experience? 

Think about your last Amazon order. Which would you prefer to see?

  1. That your order was filled within a few hours and will be to your home in a week.
  2. Each day, that your order wasn’t filled yet, until a week later when it’s filled for delivery the following day.

Either way, your package will arrive the same day. But if you’re like most people, you’d prefer option A. If you can’t have your new ear buds today, it still feels good to know they’re on their way today.

And so it goes with lending. If you’re trying to decide which to overhaul first – decisioning or processing – the easy answer is decisioning. Because if you can’t say yes right now, 10 lenders who can say yes right now are only a couple of mouse clicks or screen taps away for your digital-savvy members. The best loan processing automation won’t do you much good if your members choose not to wait for an approval. The key is auto-decisioning.

Right now, you’re probably thinking, but we already do auto-decisioning. Some auto-decisioning is better than no auto-decisioning, but an informal survey of our own customers showed that on average, only 20% of loans were auto-decisioned in their pre-Zest environments. What’s more, that auto-decisioning typically only considered a handful of variables for each applicant.

A Better Way

No matter where your credit union is in its manual-to-auto decisioning ratio, there’s a better way. The Zest AI way.

Zest’s AI-driven loan decisioning software improves on manual decisioning by making it more consistent than manual decisioning (which, according to our customers, isn’t very consistent at all). And it improves on other auto-decisioning methods by evaluating over 1,000 different variables on every applicant. This leads to significantly more approvals without any increased risk.

But most important of all, the Zest platform can evaluate all this data and render a decision instantly. If the answer is yes, the member is going to know right now. What’s the net effect of all of this? More approved loans and ultimately more booked loans, again without increased risk.

Lightning-fast loan decisions are especially critical for credit unions that book a large percentage of their auto loans through indirect lending. In that highly competitive environment, it’s often the institution that says yes the fastest that books the loan. A speedy loan approval with a credit union rate is hard to beat.

Using Zest AI to say yes faster (and more consistently, and more accurately) has an inevitable ripple effect that leads to happier members, stronger loan portfolios, and healthier growth. Then someday, your members will wish that Starbucks could create as a great a digital experience as your credit union.

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