Fine to be First: SACU Continues Blaxing Trail in Indirect Lending

SAN ANTONIO – Eighteen years ago, San Antonio Federal Credit Union (SACU) became the first credit union in the country to do indirect auto lending, its key executives say, and it hasn’t looked back since. The $1.7 billion, 16-branch CU has continued to build on that legacy, using in-house talent to create an indirect lending technology infrastructure that it used to fund 24,400 loans totaling $544.5 million from its own membership and 4,691 loans for $110 million from outside the CU last year alone, according to Chuck Smith, first vice president of lending at SACU. That activity occurs through a CUSO called CARS (Credit Acquisition Resource Systems) that SACU now uses to serve nine other credit unions in San Antonio, Houston, Victoria, Bryan, College Station and Lake Jackson, Smith says. Smith and two other staffers took about a year away from their regular jobs to create the latest iteration of SACU’s indirect lending pre-approval system. The system, which has no formal name, originates, scores, underwrites, approves or declines and is interfaced to the CU’s IntegraSys Premier core processing system. That key interface – which connects SACU’s core processing functions to its multi-function APPRO loan-management engine – was built by a Dallas firm, Trinity Net. “We use the interface to do such things as generate ACH to a dealer at the time of funding, and also when we fund a loan for our other credit union partners, such as Texas Dow Employees Credit Union,” Smith said. Also involved in the intricate dance of technology that ties together SACU and its credit union partners and about 275 dealers is an interface with DealerTrack, the nationwide indirect lending operation that has helped lead such business into the age of the Internet. “We first got our APPRO functions up and running, and then became the first credit union in the country, about 15 months ago, to go online with DealerTrack, and now about 98% of our business comes in that way,” Smith says. “We’re also close to having e-contracting, in which the member signs at the dealership and a digital contract will come across and we’ll fund from that,” he says. “Theoretically then you can walk into a dealership, pick a car, put the application in the system, get approved in 60 seconds, sign the deal, bounce it off our validation system via DealerTrack and APPRO, sign and submit it at the dealership, fund it through ACH to the dealer accounts and have the dealer paid, all in under two hours,” Smith says. “Right now, there’s still always some human intervention, some hands touching the process, but we’re always working to make it as efficient as we can,” he says. Smith’s team included Pat Evans, who manages lending operations functions, and Nora Chandler, currently a branch manager who “at the time was more like the IT person in our lending division, the person who helped us with vendors and integration. She’s the one who kept us based in reality on those issues,” Smith says. The SACU executive says he and his colleagues felt personal and professional pride in the work they did to create their own solution, but that more importantly, it provided the credit union an efficient way to compete in the fierce automotive lending market, with its thin margins and time demands. And it helps bring in new members. And while there are ready-made platforms now that can do what SACU created in-house, there wasn’t at the time, and the time was right, Smith notes. “We knew what was coming and we needed to be ready, because dealers would be very soon wanting to do indirect business with us via the Internet, rather than faxing and punching in data,” he says. And they’re not done yet. The credit union recently added online payoff information functionality to its platform, allowing any DealerTrack user to electronically acquire payoff details on any SACU auto loan. “We want to be first for something else again,” Smith adds. “Now we want to be the first credit union in the country using digital signatures, and we’re close to doing just that.” SACU also is working on expanding the indirect lending process beyond cars and into the “small-ticket financing area, such as spas and stereo equipment, doctors and dentists offices, items that range typically from $2,000 to $10,000 or so,” he says. The process is now under way with a couple spa companies, a granite countertop provider and a portable building company, Smith says. “Like the auto loans, it works without a lot of human intervention, from point-of-sale through our APPRO system all the way to Certegy. There the member signs a credit card agreement and the money is sent by ACH into the merchant’s account. And instead of 18.5% or something like that, our member gets an installment feature and a rate of 10.5% or less,” the SACU vice president says. “We’re really excited about it. We’re the first in the credit union industry to do it.” -