loan origination software for banks

HOW TO CHOOSE CREDIT UNION SOFTWARE FOR 2023 AND BEYOND

The defi Team Credit Unions, defi INSIGHT

how to choose credit union software checklist

Credit unions have a distinct advantage over nationwide financial institutions: their deep understanding of the local economy and the specific financial needs of their members. This inherent advantage allows credit unions to tailor their services to meet the requirements of local markets. In this article, we will provide valuable advice on selecting the ideal credit union software for loan origination and servicing.

One particular area where credit unions can capitalize on their established goodwill is in auto loans and leases. By offering competitive auto loan options to their members, forging lending partnerships with local auto dealerships, or simplifying the application process for community members, credit unions can bolster their profitability and cultivate member loyalty. However, to achieve these capabilities, credit unions must rely on a reliable credit union software solution. With a wide array of options available on the market, how to choose credit union software that perfectly aligns with your unique needs becomes a crucial decision.

What to Look for in Credit Union Software Solutions
Cloud-based Lending PlatformIn today’s digital landscape, cloud solutions have become ubiquitous across all industries, offering tangible benefits such as faster implementation times and reduced operational costs. Opting for a cloud-based lending platform ensures that your credit union can leverage these advantages.
Configuration MenusHaving configuration menus within the software empowers knowledgeable lending professionals to swiftly tailor the solution to align with your institution’s unique processes and policy requirements. This flexibility enables seamless customization according to your specific needs.
Integrated AnalyticsAnalytics plays a vital role in empowering lending professionals to delve into data and extract valuable insights. By identifying trends and refining credit policies, these insights help reduce risks associated with lending. Therefore, it is crucial to choose a software solution that offers integrated analytics capabilities.
Configurable Decision RulesStreamlining the lending process is essential for optimizing efficiency and maintaining consistency. Well-designed decision rules within the software eliminate the need for numerous manual decisions and handoffs that can hinder process efficiency or lead to inconsistent outcomes.
Digital Lending ExperienceIn today’s digital age, a seamless digital lending experience has become an expectation for borrowers. A comprehensive digital lending platform empowers lending professionals to handle all communications and documentation digitally, providing convenience and efficiency to borrowers and credit unions.
Information Sources That Reduce RiskTo make informed lending decisions, it is essential to have access to comprehensive and reliable information sources. Integrating lending-specific information sources within the software solution enhances lenders’ confidence in assessing borrowers’ financial situation and creditworthiness, ultimately reducing risk.

How to Choose Credit Union Software: Key Considerations

The field of lending software solutions has witnessed significant advancements in implementation and management capabilities. Credit unions now have the opportunity to swiftly leverage the latest features, benefit from automatic software updates for improved performance, and seamlessly extend functionality by integrating innovative information sources and services. To make the most of these advantages, it is crucial to select a credit union software solution that offers the following key features:

  • Cloud-based lending platform. Ensure that the software solution you choose is hosted by reputable and market-leading cloud service providers. Cloud solutions have gained widespread adoption across various industries, delivering proven and quantifiable benefits such as accelerated implementation time and lower operational costs.
  • Configuration menus. Look for a software solution that provides extensive customization options through configuration menus. This allows your knowledgeable lending professionals to quickly tailor various aspects of the solution, including the user interface, access rights, workflows, queues, decision rules, verifications, and integration with cloud-based lending services. Compared to software solutions that require lengthy and customized programming, the configuration approach empowers your team to swiftly align the solution with your specific process and policy requirements.
Configuration menus allow knowledgeable, authorized users to easily customize the user interface for individual roles and responsibilities.
  • Integrated analytics. Including integrated analytics is a crucial component in any credit union software solution. It equips lending professionals with the ability to monitor emerging trends in loan or lease applications and assess portfolio performance. Today, analytics is essential in empowering lending professionals to explore data, gain valuable insights, identify trends, and refine credit policies to reduce risk.

Software Features to Enhance Efficiency and Mitigate Risk

While cloud, configuration, and analytics are essential features of any credit union software solution, it is also crucial to explore additional functionality that can provide credit unions with a significant advantage over older software solutions. To optimize efficiency throughout the lending lifecycle, consider the following capabilities:

  • Configurable decision rules. Look for a software solution with configurable decision rules to drive workflows across loan submission, underwriting, funding, and servicing processes. Well-designed decision rules can eliminate the need for manual decisions and handoffs, improving process efficiency and ensuring consistent decisions. By translating credit policies and compliance guidelines into automated processes with an audit trail, underwriting decisions that once took minutes can now be accomplished in a fraction of a second.
  • A completely digital lending experience. Embrace the advantages of a fully digital lending experience to eliminate the burdens of paper-based processes and their inherent inefficiencies. From initial loan submission to funding offers and throughout the servicing phase, the software should enable all communications and documentation to be handled digitally. Leveraging mobile devices, borrowers can capture required documentation for loan or lease applications. Offers can be delivered as e-contracts for quick review and acceptance by borrowers through e-signatures. Borrowers can also set up auto-payments, make one-time payments, access statements, and update contact information online. Embracing a completely digital lending experience not only enhances efficiency throughout the lending cycle but also empowers borrowers to have greater control over their accounts, reduces printing and mailing costs, and minimizes the need for borrowers to contact the call center.
credit union software solutions
Borrowers can access current account information anywhere, anytime online, reducing the need for printed statements and calls to customer service.
  • Information sources and services for risk reduction. A significant advancement in credit union software solutions is the integration of various lending-specific information sources and services. These resources provide lenders with greater confidence in assessing a borrower’s financial situation and creditworthiness, resulting in reduced risk.

    Consider the following benefits:
    • Enhanced credit extension for borrowers with limited credit history: Alternative credit data sources utilize utility, rental, mobile payment records, and banking information to provide a more comprehensive view of a borrower’s creditworthiness. This allows credit unions to offer credit to applicants who may have been denied previously due to a lack of credit history.
    • Fraud detection capabilities: Sophisticated algorithms analyze loan or lease applications to identify inconsistent information that may indicate potential fraud. Based on confidence in the fraud score, the software can auto-decline applications (with accompanying reasons) or route them for review by experienced underwriters to determine eligibility.
    • Risk-based loan or lease terms: Machine learning techniques evaluate historical borrower attributes and credit union portfolios to develop credit models that assess lending risk. These models recommend appropriate terms and conditions, resulting in up to a 15% increase in auto loan approval rates without compromising risk assessment.

Choose the Right Software Solution Partner

While the technology and capabilities that underlie modern credit union software solutions are critical to maintaining efficient, profitable lending operations, also consider the focus of the software vendor to discover how to choose credit union software. Look for a vendor with its roots in lending that continues to focus on innovative solutions and services that improve the experience of credit unions and their members. They’ll understand all the nuances of delivering the functionality and user experience that optimizes the lending process for all involved—credit union members existing and new, loan officers, managers, risk analysts, and customer service representatives. 

Take advantage of a rich knowledge base from the software vendor and fellow users to gain the greatest efficiency and benefit from your credit union software solution.

The best credit union software vendors employ people with real-world lending experience that guides the software’s development, implementation, and support. Customer support portals, annual user group conferences, and customer round tables are important aspects of establishing a mutually beneficial business relationship. When choosing a credit union software solution, take a holistic approach. Technology, industry focus, and employee experience are all vital to your success.

If you are looking for an industry-leading credit union software provider for loan origination and servicing firmly grounded in lending best practices, look no further than defi SOLUTIONS. Our defi MANAGED SERVICING provides a single hub, digital interactions, and intelligent virtual assistants to bring everything together.

With defi MANAGED SERVICES, you can ramp up a new or beef up your existing back office operation with white-label, outsourcing services for:

  • Inbound call handling and fulfillment
  • Return mail processing
  • Payment processing
  • Collateral management title work
  • Accounting
  • Cash management
  • Back-office payment processing
  • Default management (collections, bankruptcy, repossessions, recovery)
  • Lease maturity management
  • Remarketing

defi MANAGED SERVICING uses artificial intelligence (AI) and Contact Center as a Service to boost operations and processes related to auto loans, leases, and leased vehicle dispositions, reducing budgetary expenses and improving customer service. 

Getting Started

defi SOLUTIONS is redefining loan origination with end-to-end software solutions that enable lenders to automate, streamline, and deliver. Borrowers want a quick turnaround on their loan applications, and lenders want quick decisions that satisfy borrowers and hold up under scrutiny. With defi MANAGED SERVICING, lenders can improve operations and processes related to auto loan servicing, leases, and the disposition of leased vehicles, cutting expenses through automation and outsourcing services. For more information on what to look for when considering auto loan servicing for credit union portfolios and how we can help,  contact our team today and learn how our cloud-based loan origination products can transform your business.

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