SPECIAL REPORT: TECHNOLOGY
How CuneXus Helped Harborstone And Educational Employees CU Boost Loan Growth
by W.B. King
SEP 19, 2014 11:50am ET
LAKEWOOD, Wash. — Harborstone Credit Union knew it had a lending problem.
“Like many other credit unions, we extended pre-screened preapproval offers to our members each quarter for auto loans,” said Harborstone Vice President of Digital Sales and Service Ken Bloomfield. “We were aware that was a broken model in that only [an approximate] 4% of consumers are in the market for financing a vehicle in any given month.”
In an effort to increase the convenience and overall trust from its members, Bloomfield and his team set out to find a solution that offered pre-screen preapprovals on multiple loans — when and where it’s most relevant for members. After vetting vendors, the CuneXus CPL solution was selected.
“This expanded a traditional quarterly pre-screened auto preapproval campaign to a pre-screened multi-loan offering that members can access 365 days a year using online banking,” said Bloomfield. “In essence, we provide the convenience for members to accept offers the way they want to, which is when they are in market, rather than in some predetermined mailing cycle.”
Understanding CU Lending
President of the Santa Rosa, Calif.-based CuneXus, Dave Buerger, explained that his firm is comprised of partners who previously worked in the credit union space on the client side. As a result, they had a firm understanding of related industry wants in relation to lending models.
“This concept was first developed in 2006 when we were working for a large credit union here in California,” said Buerger. The first “skeletal” iteration was a mailer, which received kudos from industry organizations such as CUES. A few years later, in 2012, a digital compliment was conceived for mobile, online banking, email and cross-sell at the teller line.
It would take two years of funding and solution tweaks before a pilot was rolled out in January of this year to three credit unions. After successful completion, the product went live on April 30. Among patriating credit unions was Educational Employees Credit Union (EECU).
“Our loan pre-approvals have always been through snail mail, but now we can leverage our online banking, email, and mobile channels too.”
After 90 days, the $2.2 billion credit union, serving 230,000 members, realized positive results. For example, 1,158 Auto, Visa and Overdraft loans were generated. In total, there was $24.5 million in loan requests and $4.3 million in incremental loans. A 3.76% direct response rate was realized and 24% increase in ROI over 2013.
“Our loan pre-approvals have always been through snail mail, but now we can leverage our online banking, email, and mobile channels too,” said EECU Communications Director, Michelle Hernandez. “Our first loan pre-approval campaign with CuneXus was a huge success, and we’re looking forward to brainstorming with them in the future concerning other lending opportunities.”
Buerger explained that CuneXus’ advanced risk assessment and pricing engine uses a combination of data points, including accessing existing product relationships and credit bureau information to generate highly-personalized sets of pre-screened loan offers. Loan products offered in the EECU pilot included auto, RV, boat and motorcycle loans, as well as non-auto offers such as VISA credit cards and overdraft loans.
For many credit unions, Buerger said that the company’s Enterprise Model would be appropriate. This requires a one day onsite installation of software that is internally hosted. As such, sensitive member data remains protected behind the firewall and is never “touched” by CuneXus.
“This is a two-part system. There is an engine that runs the decisioning process, pricing and targeting of the pre-approved offers, which feeds the data base,” said Buerger. “The second part is market automation, which accesses in real-time all communication channels — online banking, mobile banking, teller line, call center, et cetra.”
From discovery to roll out, the process can take 60 days. The first campaign goes live after that time period. “Most of the time is first spent vetting vendors, and then we provide numerous onsite demos,” said Buerger. “Once the contract is signed, the majority of time spent is optimizing the system to meet a credit union’s business rules, compliance and thresholds.”
Moving forward as a new client, Bloomfield said Harborstone CU’s return on investment will be determined by the incremental lift realized in all offered loan types.
“This is not just changing consumer behavior or channel migration and initial results look great.” He said. “We expect to have a good sample of results in early 2015 to better evaluate the effectiveness of the solution.”
“This is not just changing consumer behavior or channel migration and initial results look great.”