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 — more tortoise than hare — slow and steady. However, in today’s hyper-competitive marketplace, slow and steady just can’t win the race.

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 being speedy for either of these components. But which is more important to the member experience?

Take a moment to think about your last online order. Which would you prefer to experience?

  1. Pre-purchase, you see a delivery prediction for a week from placing the order, alongside an update that your order was accepted within a few hours of placing it.
  2. Post-purchase, you get an update that your item will be delivered in a week.

With either scenario, your package will arrive the same day. But if you’re like most people, you’d prefer option one. If you can’t have your new ear buds today, it still feels good to know upfront when you can expect them.

Same goes for lending. If you’re trying to decide which to overhaul first between decisioning or processing — your priority should be decisioning. If your credit union can’t say yes, quickly, there are ten other lenders who are only a couple of clicks away for your digital-savvy members. Your key to success is with auto-decisioning. The best loan processing automation won’t do you much good if your members choose not to wait for an approval. 

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 percent of loans were auto-decisioned in their pre-Zest environments. What’s more, that former 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-automated underwriting technology improves overall 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 hundreds of different variables on every applicant. This leads to significantly more approvals without any increased risk.

But most important of all, the Zest AI technology 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 accurately) has an inevitable ripple effect that leads to happier members, stronger loan portfolios, and healthier growth. 

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