CUs Continue to Take the Lead With Open-End Lending

MIAMI – It's been 25 years since CUNA Mutual Group worked with the federal government to adopt language that helped bring open-end lending to the credit union market and subsequently introduced its LOANLINER lending. Even now the product remains almost exclusively a credit union product. Bill Klewin, assistant vice president, CUNA Mutual Group Lending Solutions told attendees at the CUNA Lending Council conference that "only a handful of banks" offer open-end lending, and "the few banks that adopted the practice did so after hiring a credit union executive." Open-end lending is similar to a revolving line of credit. A member applies for a loan once, but can add to it in the future without having to complete additional paperwork and often with just a telephone call or mouse click. "Open-end lending anticipates repeat activity, which simultaneously helps credit unions and their members," said Klewin. "The member has the convenience of adding new purchases with minimal effort, and the credit union can increase and handle more loan volume without adding staff. It significantly decreases the costs per application." He added that, "Open-end lending has enhanced the lending experience for members and employees while contributing to credit unions' bottom line." Despite the benefits of open-end lending, Klewin emphasized that credit unions still have to find other ways to keep the lending process quick and easy. Among his suggestions were pre-approving members for signature and auto loans, providing quicker disbursements of funds, and offering auto draft for payment. "This way, the member never gets a paper check, or has to write one," he said. See CUNA Lending Conference Coverage on pages 34,35 and 66.