Online Applications & Automated Decisioning – Are They Worth the Investment?

Advancements in technologies has not only increased efficiency and productivity for credit unions, it has also made things more convenient for members. It wasn’t that long ago that applying for a loan online and receiving an instant decision was an impossibility. Nowadays, it’s an expectation.

In response to this growing trend some credit unions are starting to offer automated loan decisioning. CU Solutions Group offers LoanDecision+, a fast and simple way for your members to apply and get approved for mortgage, auto and commercial loans, as well as credit cards, on your website 24/7. Others are setting up “virtual branches” where potential members can apply to join, open up new accounts, and submit and track loan applications. Although the latest and greatest technology is often appealing, (Who doesn’t want an iPad, an Android Tablet or a 60-inch 3D flat-screen television?), sometimes you have to ask yourself, is it worth the price?

Any investment in new technology should provide a payback. For a personal purchase, the fact that it makes you happy may be good enough. But if you’re the CEO, the CFO or the CIO of a credit union, you will need a little more than that in your back pocket before you approach your board of directors with a proposal to increase your technology budget.

Benefits vs. Costs
Fortunately, many of the benefits of automation are easy to measure. You can track the ROI in new members, increased assets and more loan applications. Other payoffs, however, may be less tangible — appealing to Generations X and Y, increasing staff efficiencies or fostering cross-department communications — but are still highly critical to your strategic plan.

An important consideration is the cost of any new technology. Some technology providers require a significant investment on the front end while others allow you to “pay as you go.” Plan to do your homework when it comes to pricing so you’ll understand what you’re paying for up front and what charges may show up further down the road in upgrades or other services.

Below are some important questions you should ask:

• Is the technology in compliance with current NCUA mandates?
• Does the technology have acceptable security and redundancy measures in place?
• Does the technology support the requirements of your credit union and your members?
• Does the technology integrate with your data processor?
• Does the technology provide acceptable processing and decisioning times to meet your staff’s and member’s demands?
• Does the technology provide adequate reporting functionality?
• Does the technology effectively manage and store all your documents electronically?
• Does the technology provide sufficient tools for communication between your staff and your members?

Below are some ROI considerations:

• Increase online applicants
• Increase overall loan generation
• Opportunity to cross-sell via point of sale and data mining
• Increase new member acquisition/enrollment
• Reduce labor and processing costs
• Lower administrative costs
• Electronic docs and paperless cost savings
• Improve member relations
• Increase staff efficiencies

Credit unions who perform proper due diligence should discover that the right solution may pay for itself in the long run.