September 28, 2011
Credit Union Management magazine’s Web-only “Tech Time” column runs the fourth Wednesday of each month.
Adding value to credit unions is crucial to gain and retain members. $321 million, 29,757-member Salal Credit Union, Seattle, has worked with financial technology services provider and consultant CUTEK Inc. to effectively and efficiently offer members payday loans. Together the two have developed SalalReadyCash, a custom automated payday processing system that uses an HTML user interface available from the Episys® core processor of CUES Supplier member Symitar™, a Jack Henry company based in San Diego.
Salal CU offers payday loans because it knows its members get them elsewhere at a much higher rate than the CU would charge. The CUTEK system quickens the entire payday lending process from the request of the loan, decision, funding, and printing of the loan disclosure. As a result, members can apply for and receive funds from their payday loans in a timely manner, while Salal CU saves on labor costs to process the loan and has a member history for future loans. The final version of SalalReadyCash went live July 1, 2011. Since then, applications have not gone up, but back-end processing has become more efficient.
SalalReadyCash provides the user with a member payday lending profile screen, which includes such information as whether the member is eligible to apply for a payday loan, if he or she has any active payday loans, and a history of any previous payday loans. If the member is eligible to apply for a new loan when the “Apply” button is selected – through a real-time interface with the CoreLogic® Teletrack™ solution—a custom credit score is retrieved.
An automated decision is made using the score. The user is then provided the option to execute the loan, which automatically creates the loan file, advances/funds the loan, places the funds in the member’s share account, and produces both an electronic and paper loan disclosure – one as a member copy and the other automatically sent to Salal CU’s imaging system for archiving.
“We have been offering a ‘manual’ version of SalalReadyCash for a while now, but it was a time- consuming process taking up to 15 minutes from start to finish,” says CUES member Debbie Marks, training and development manager for Salal CU.
The training department does not process SalalReadyCash loans. “Because of our knowledge and experience with our new core processing system, we took on the project of seeing if we could automate the program with the new system,” Marks notes. “CUTEK came in and built a program to fully automate the process and incorporate all necessary checks and balances as well as forms. The entire process now takes 3-5 minutes” for staff. Members must still apply manually with the CUTEK solution.
Previously, staff had to painstakingly research accounts to ensure potential applicants were members with the necessary credit standing, payment history etc. before they could apply for a payday loan.
If they were eligible, staff would then manually launch the Teletrack online application and cycle through a series of prompts to further ensure the member was qualified to apply. And if those filters were passed, Teletrack would provide a credit score.
After all that, Salal CU’s old process still wasn’t done. The user then referred to the decision policy to ensure the member’s score was above a particular threshold for approval. If approved, staff went back to the member’s account on the host application and manually created the loan and advanced the funds into the member’s share account. If denied, the user had to manually complete a denial letter. In addition, no payday history was kept.
“Automating the process saves time for both our employees and our members, reducing staff frustration,” Marks says. “We are always striving to improve the products and services we provide for our members. The SalalReadyCash program helps achieve that goal.”
The payday loans couldn’t be originated using the CU’s general loan origination system because these short-term loans are approved using Teletrack for credit scoring, rather than more traditional scores from the big three credit bureaus.
Mike Lawson is the owner of DML Communications, San Diego.
