Federal Credit Union
30% Increase in Lending Efficiency
Automated Credit Decision on the Edge
Situation
A large federal credit union was facing several challenges in its loan origination process. Their existing loan decisioning system had limitations that resulted in a high rate of manual reviews, impacting loan funding rates and member experience. Additionally, long-standing underwriting criteria needed an overhaul to meet aggressive approval rate and loss rate goals.
Impact
As a result of the manual reviews, loan funding rates were impacted and member experience was poor. The credit union was struggling to meet its goals in terms of approval rates and loss rates. Staff occupied with manual reviews meant they could not focus on other core activities. The slower loan origination process meant a poor member experience as decisions took longer.
Resolution
The credit union partnered with Relevantz to implement an advanced decisioning system, aiming to streamline credit underwriting, reduce manual reviews, enhance the member experience, and increase the efficiency of loan funding. We worked with the credit union to understand their internal business policies, system constraints, and guidelines.
Relevantz’s solution involved a phased analysis and implementation approach.
Scorecard Validation: The existing scorecard was validated against other scores to understand model performance.
Swap-Set Analysis: A swap-set analysis was conducted, comparing the existing risk score with other scores included in the validation, along with the client’s score cutoffs and risk-based pricing tiers.
Automated Underwriting Strategy Design: Relevantz designed an automated underwriting strategy tailored to meet the credit union’s loss rate and approval rate goals.
Instant Credit via Decisioning as a Service Implementation: An integrated decisioning system was implemented, providing flexible access to data, attributes, and scores, resulting in increased decision automation.
Outcomes
The credit union’s decision to partner with Relevantz and implement these solutions resulted in tangible improvements in their loan origination process. They were able to fund more loans faster, reduce manual reviews, and offer a better member experience while maintaining compliance and improving their loan portfolio’s quality.
Increased Efficiency: Within one month of implementation, the credit union saw a 30% increase in loan funding rates. This efficiency improvement was a direct result of the automated underwriting strategy.
Reduced Manual Reviews: Manual reviews were reduced by 35%, freeing up valuable resources and accelerating the loan origination process.
Improved Member Experience: Members benefited from quicker loan decisions, contributing to higher satisfaction rates and a better overall experience.
Enhanced Loan Portfolio: The credit union was able to improve the quality and diversity of its loan portfolio, matching members to the right loan products.
Adaptability: The implemented system allowed the credit union to quickly adapt to evolving market conditions and regulatory requirements, ensuring compliance and competitiveness.
- 30% increase in lending efficiency
- Streamlined real-time decision-making
- 35% reduction in manual reviews
- Increased member satisfaction