Conceptualizing the Future of Lending Technology: CU Direct’s Drive
LAS VEGAS – CU Direct’s 2017 Drive conference came two months after the grand opening of the Ontario, Calif.-based lending CUSO’s Innovation Lab in Irvine, Calif., and so far, the facility has been buzzing with big ideas on how to make the auto lending process speedier and more efficient for credit unions, members and dealers, according to executives.
CU Direct President/CEO Tony Boutelle and SVP of Marketing and Innovation Brian Hendricks sat down with CU Times at the conference to discuss life in the Lab and key focus areas for groups that have gathered there thus far. Hendricks emphasized that while innovation has always been one of CU Direct’s core values, the Innovation Lab is intended to provide a collaborative environment, and serve as a place where credit unions can play a key role in the development of technology products that they may eventually use in their auto lending programs.
The Innovation Lab is an open workspace for CU Direct employees as well as an event space that has drawn a number of local credit unions, and it’s consistently booked for meetings with outside groups, Hendricks (pictured below) said. “It’s also a peaceful and tranquil space that allows us to focus on innovation,” he added.
He explained that members of advisory councils have been mapping out the member’s auto purchasing and financing journey, discovering the biggest pain points along that journey and exploring ways to develop a faster, better experience that will get members to keep coming back. “We know that success is based on repeat business,” Hendricks noted.
They’re also looking at ways to reduce the amount of time the borrower spends at a dealership, speed up the loan funding process and allow the member to drive the entire loan transaction themselves.
Boutelle (pictured at left) and Hendricks described two key concepts that are being explored in the Lab:
1. Streamlining the sight draft process. A sight draft (essentially a blank check that a consumer receives from a lender after qualifying for a loan) is an empowering tool for borrowers as it allows them to go into a dealership, show the dealer the site draft as proof of financing, and drive off the lot in their new ride right away. The problem is, after that, the credit union still has to follow up with the member to finalize details such as the loan term and fund the loan. In the meantime, the credit union misses out on interest income it could have earned had the loan been funded more quickly. To solve this problem, CU Direct innovators are looking at ways to digitize the experience, for example by allowing the member to complete the loan funding process from their smartphone the day they pick up the car at the dealership.
2. Loan beacons. A loan beacon is a device that would potentially be installed at dealerships and drives out electronic push notifications to credit unions, members and dealers. When a credit union member who has been preapproved for an auto loan walks onto a car lot, the beacon would notify the dealer that a preapproved member has arrived onsite. In addition, the beacon might notify the member on their smartphone about the preapproval, while the credit union may receive a message stating the member was on the lot shopping. Hendricks noted that the loan beacon – which CU Direct has successfully created, but not yet fully tested with credit unions – would create stickiness as well as tie credit unions, members and dealers together to fund more auto loans.