After the Texas Department of Motor Vehicles implemented its electronic lien and title program in November, Texans Credit Union decided to move to an electronic title system.
In January, the CU made the move for its 97% of vehicle loans that are secured in Texas and plans to implement the system for titles in other states this spring.
Electronic lien and title solution provider, VINtek, took over Texans' paper inventory and sent electronic images of the files to the credit union. For new titles, the credit union receives them electronically directly from the dealership.
Craig Thomas, vice president of retail lending at Texans, said that the greatest benefit of the move has been time savings.
"Releasing liens at payoff is now fully automated. We are taking advantage of the labor savings by cross-training staff and balancing our resources between our consumer loan and mortgage origination and servicing teams based on peak and slow times," Thomas said.
He added that the labor dedicated to tracking new titles and releasing titles at payoff has been reduced by half. Thomas also said that much of the paper moving around the office and Excel spreadsheets used to track new loans and titles have been eliminated.
"Texans came to us with the goal of becoming entirely paperless. They recognized that paper equals cost and inefficiency," said Larry Highbloom, president of VINtek.
One thing that Thomas said the credit union has to be cautious of with the change to electronic titles is that the member experience changes. When a member pays off the loan it now will take a day or two for them to receive the paper title, since it is no longer located in the building. Thomas said though that it is simply just a change in communication with the member.
"Since the paper title is no longer in the building, it is not possible for the member to pick it up at payoff. It is critical to communicate clearly to members to keep their expectations in alignment with the new processes-especially those long-time members that have had several loans with the credit union."
With 13 states adopting electronic lien title practices, California passed legislation in October that requires all titles to be paperless by January 2010, Highbloom said he has seen an increase in business.
"Credit unions went through a volatile 2009. Institutions of every kind have had to refocus and operate leaner and many credit unions have started to realize that paper titles is a non-value add process."
He added that he expects more credit unions to continue to make the move to electronic lien and title programs this year.
In advice for other credit unions looking to make the change, Thomas said to get organized early, modify processes appropriately, assure employees and embrace the technology and don't be afraid to let go of the paper.