Credit unions are constantly on the lookout for innovative ways to boost operational efficiency, enhance member satisfaction, and establish themselves as trusted auto financing sources in today’s competitive marketplace. Document processing automation (DPA), a cutting-edge technology that leverages artificial intelligence (AI) and machine learning (ML), is helping credit unions revolutionize their lending. Although there are numerous benefits to leveraging this advanced technology, we’ve narrowed it down to five key ways DPA elevates indirect lending for credit unions.
1. Streamlined loan processing
In auto financing, speed is crucial. Members expect quick decisions and seamless experiences. DPA automates the classification, analysis, and extraction of data from complex documents like pay stubs, W-2s, financial records, and insurance policies. This automation reduces processing time from days to mere hours. AI-powered tools with fuzzy match logic can recognize patterns and similarities in text and data, even with variations or discrepancies. This means DPA can swiftly process over 250 types of loan jacket documents and more than 45,000 document subtypes, allowing credit unions to meet member demands promptly and maintain their reputation for exceptional service.
2. Improved accuracy
Errors in the lending process can lead to financial losses and member dissatisfaction. Traditional processes are prone to human error and inconsistencies. DPA introduces a new level of accuracy by adhering to predefined rules and guidelines, ensuring consistent decision-making for every loan application. For instance, DPA automates income calculations using various documents and compares them against the stated income on loan applications, ensuring high accuracy and efficiency. Additionally, DPA excels in detecting fraudulent documents, a critical capability given the prevalence of income and employment fraud in the auto lending industry. In 2021 alone, auto lenders faced nearly $5 billion in losses due to fraud. DPA helps identify forged pay stubs and fake documents, addressing a major concern for lenders.
3. Accelerated funding & better dealer relations
Strong relationships with dealerships are vital for the success of credit union auto lending programs. DPA expedites loan funding processes, reducing contract-in-transit time, lowering holding costs, and improving cash flow for dealers. This efficiency makes credit unions more attractive as lending partners. Enhanced dealer relations can lead to increased leverage, improved portfolio mix, and more competitive terms for members. Moreover, when credit union staff can focus on building deeper connections with dealerships instead of mundane data entry, it opens opportunities for collaboration and growth.
4. Boosted operational efficiency
Operational efficiency is the cornerstone of a successful lending program. Many credit unions still take seven to 10 days to fund their dealers, but with DPA, funding can occur in 24 to 48 hours or less. DPA streamlines operations, optimizes resource allocation, and efficiently manages volume peaks from dealers. This adaptability allows credit unions to handle increased volumes without a proportional increase in overhead costs. By minimizing the need for manual document sorting and categorization, DPA frees up staff to focus on higher-value tasks like building relationships with members and dealerships, enhancing efficiency, reducing operational costs, and improving the bottom line.
5. Dedicated focus on members
Credit unions pride themselves on their member-centric approach. DPA enhances this commitment by enabling credit unions to serve their members with greater efficiency and accuracy. Members benefit from improved accuracy in the lending process and a smoother, more convenient experience. A seamless lending process fosters member loyalty and encourages word-of-mouth recommendations, leading to increased membership and loan volume — contributing to the credit union’s overall success.
In the dynamic world of indirect lending, DPA is not just a tool; it’s a strategic imperative for a more efficient, accurate, and member-focused future for credit unions. As credit unions continue to navigate the evolving landscape of auto financing, those equipped with DPA capabilities will be well-prepared to lead the way, ensuring their continued relevance and prominence within their communities.
