CUDL Uses Post-relational Technology to Drive Auto Loan Growth

RANCHO CUCAMONGA, Calif. – Simplifying the complexity is the key behind the latest technology deployment that has Credit Union Direct Lending building on its current success as the largest such network for credit unions in the country. The organization completed installation in 2002 of a Web-based, automated indirect lending system built on a post-relational database which now allows it to quickly take the process from initial application to final transferring of funds. CUDL called on Atlas Development, a consulting firm from Woodland Hills, Calif., to take the CUDL legacy system to the Web. That firm then chose the Cache’ object-oriented database solution from InterSystems Corp. to perform front-end input, query the database and perform rapid decisioning for high-performance transaction processing on the Web, tying together credit unions and car dealers. “The dominant trend today is to build a simple and attractive user interface that hides a complex application,” said Paul Grabscheid, vice president of strategic planning for Massachusetts-based InterSystems. “Cache’ is a post-relational database that stores data in multidimensional arrays instead of in a series of flat tables . which makes it easier to find, lock and update only the data required by a particular transaction,” Grabscheid said. “For example, the application and database engine do not have to spend time accessing multiple tables, or locking entire pages of data while they search for the data affected. The end result is that individual transactions run faster and more transactions can run concurrently,” he said. Other major players in the credit union space, including USERS Inc. and FORUM Solutions, have deployed the Cache’ system to develop open processing, home banking and other systems. And it now has helped CUDL secure a spot as the largest indirect lending network for credit unions in the country and the third-largest lender in California. CUDL’s operator, Credit Union Direct Corp., is owned by about 30 credit unions and industry organizations and moved its data center from The Golden 1 CU, where it got its start, to company headquarters in 2001. It currently has about 100 employees and has relationships with about 230 credit unions (representing more than 7 million members) and 1,700 new car dealers. In 2002, CUDL handled 174,011 contracts worth about $3.2 billion. It currently does business in eight states – California, New Hampshire, Rhode Island, Massachusetts, Nevada, Oregon, Texas and Washington – and is planning to expand into Florida. Deft technology has been essential to CUDL’s progress, said Ann Harris, the corporation’s vice president of technology. Credit Union Direct wanted to build a new system while maintaining as much as it could of its existing CUDL database. That posed some challenges, Harris said. “The CUDL system needed to be moved from a text-screen, dial-up mainframe application into a browser-based solution with the least amount of down time for the credit unions and auto dealerships,” she said. Now, she said, “the e-commerce, Web-accessed environment is more flexible and easier for credit unions and dealerships to use. Based on the response from a recent customer survey, the participating credit unions and dealerships have responded favorably and really appreciate the ease and speed of the system.” Citing a J.D. Power & Associates study that showed that 87% of consumer auto loans are arranged for at the dealership, Harris said such flexibility and ease of use is a key to success in the increasingly crowded marketplace. “As the largest point-of-sale lending network for credit unions, CUDL competes with banks and automakers’ financing groups,” she said. “By aggregating on the CUDL lending platform, participating credit unions have successfully raised their visibility at the dealership and extended the credit union philosophy of great service for the benefit of members to the local auto dealer,” Harris said. She said such technological teamwork is “important to the credit union industry because banking institutions and auto manufacturers have begun aggregating their auto financing on platforms like CUDL. “To effectively compete at the point of sale, it has become important for credit unions to also have a convenient, flexible and effective financing programs at the dealerships.” The efficiencies can be felt back at the credit unions using CUDL, too. For instance, Wescom Credit Union has found it can reduce by five the number of FTE’s needed to process auto loan applications, said Mike James, vice president of lending at the $2.2 billion CU in Los Angeles. “We average $18 million a month through it in indirect loans and it continues to increase,” James said. “When you’re taking about 5,000-plus applications a month, with credit reports and all the other documentation, eliminating as much paper as you can is really a key.” Wescom is a Credit Union Direct shareholder and also contributed to the technological growth of CUDL by selling it rights to Wescom’s Workflow Manager paper-reduction system, which CUDL now markets to other credit unions, James said. He also pointed out that the integrated system is helping Wescom and other credit unions win new members as well as new loans. “It’s a great way to encourage people to join the credit union and buy a new car at the same time,” James said. “We average about 900 new members a month from the CUDL system.” -