MIAMI-One credit union that has taken 66% of its 80,000 loan apps online this year is sharing tips for optimizing online lending.

John Whitehead, manager of real estate services at Pennsylvania State Employees CU in Harrisburg, Penn., emphasized to attendees at the 2012 CUNA Lending Council Conference that No. 1, the Internet lending application has to be robust and easy to use.

"We want to have members help themselves. So your system has to be convenient and self-explanatory. We are always looking to reduce the time it takes to fill out and file the loan application."

PSECU, largely a branchless credit union that relies on electronic service delivery, has improved its loan output since adopting online lending around 2003 and improving the service every year. "In 2003 we did 78 loans per employee and now we are at 120 loans per employee," said Whitehead.

A key is driving more of the "easy" loans through the online channel and kicking out the tougher ones that need greater decisioning. "Those that we kick out we let the borrower know we will contact them soon," said Whitehead.

Along with automated decisioning, the tool is integrated with the Internet application via XML, it provides custom loan review factors, and features open database connectivity. Whitehead shared that mainframe data is integrated into the loan application.

"Not only does it make things more convenient for members since their member data is prepopulated, they make fewer errors. It increases the validity of the data and improves the overall quality of the loan decision."


More Best Practices

More online lending best practices from Whitehead:

* Validate data whenever possible to increase validity and integrity. "We can do field-level checks to spot mistakes quickly."

* Keep the application clean and uncluttered. "Use dynamic questions. If members let you know they are a student or a homemaker, don't ask all of the employment questions."

* Provide a status update from the LOS to the borrower.

* Use real-time analysis to continuously monitor applications.

* Offer online loan documents and ask members if they want documents mailed or in downloadable form. "Sixty-seven percent choose the download and we found that members are 10% more likely to complete the loan if they take online documents."

* Integrate third-party services into the LOS--Use XML data from the vendor to populate fields and automatically order vendor services after credit approval.

* Cross-sell through the lending tool. "We have the member's credit data and we can decide immediately if they can be preapproved for another product. If you have the member's attention and they are looking for a loan, what better time to offer another lending product?"

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