Credit Unions Ignite Commercial Loan Growth

“In the last two years, we have increased our capacity of lending per borrower from $5 million to $15 million."

Credit unions taking bigger steps in consumer lending.

Many credit unions seek to raise their level of commercial loans. Two of them, one in Ohio and the other in Washington, used slightly different efficiencies to successfully raise their business lending game.

The $4.2 billion, Beavercreek, Ohio-based Wright-Patt Credit Union, which has 356,000 members and 31 branches, mostly in the Dayton area, wanted to digitize the commercial lending process, and focus on growth and serving business members.

WPCU raised its commercial loan portfolio 156% year over year, using a cloud solution combining the Wilmington, N.C.-based nCino’s Bank Operating System integrated with e-signatures from the Chicago-based eSignLive by VASCO.

“In the last two years, we have increased our capacity of lending per borrower from $5 million to $15 million. We were processing 30 to 40 loans a month. For several months running, we’ve had 100 loans in production in a month,” Benjamin Miller, commercial portfolio manager for WPCU, said.

WPCU serves the business community through its member business services department. In 2017, WPCU’s commercial lending team processed more than 650 business loans – an increase of 65% over the previous year.

The WPCU commercial lending department used to just focus on serving mostly small businesses, but its leadership saw growth opportunities in mid-market commercial clients. WPCU took the first step toward this with the implementation of the nCino Bank Operating System in 2016. Miller explained the credit union found nCino offered the best data analytics and reporting, and credits the system with transforming its commercial lending processes.

Trisha Price, EVP, product development and engineering for nCino, held, “The nCino Bank Operating System empowers credit unions’ employees and leaders with true insight into their institution through a digital platform that combines CRM, loan origination, workflow, enterprise content management, deposit account opening, digital engagement and instant, real-time reporting capabilities.” She added the OS integrates with any credit union core and transactional system, while replacing point solutions and manual-based processes.

Despite the initial efficiency gains, the WPCU commercial lending team was still falling back to paper to capture signatures on the final loan contracts. Miller pointed out it was not until the credit union leveraged e-signature integration between eSignLive and nCino that WPCU was able to harness the efficiencies of an end-to-end digital process. In less than one year, using the combined cloud solution, WPCU tripled commercial loan volume while also streamlining the lending experience for its business members.

Michael Laurie, vice president, product strategy for eSignLive by VASCO, noted eSignLive is available as an out-of-the-box or fully integrated SAAS solution. “No matter which plan you choose, you’ll get a solution that balances ease of use with the highest levels of security and compliance.”

After integrating eSignLive, WPCU did not have to set up its documentation manually. The nCino system populates the contact information, phone number, email and physical address of all members affiliated with the loan. Then the coordinators, who prepare the digital loan packages, send out the loan contracts without having to add signature boxes.

“The system will automatically figure out where the signatures and data goes, who’s supposed to be signing, when are they supposed to be signing, and so on,” Laurie said. “It will create a workflow for the signers.”

Once those documents are set up, a notification goes out to the signers involved in that process. “One of the important things about signing is the authentication of the user,” Laurie noted. The eSignLive system supports many ways to authenticate borrowers including email, which allows the signer to click a link to access the documents; SMS, which allows the financial institution to verify the signer’s identity by a secure passcode sent to their mobile phone; knowledge-based authentication (KBA), in which the signer faces challenge questions; and biometrics, such as requiring a handwritten signature.

Laurie said typically, the organization determines the authentication type. WPCU uses KBA.

The eSignLive process also captures an audit trail, Laurie said. “That means the integrity of the document can always be verified.” Additionally, the system can provide an evidence summary, which lists all interactions with the documents.

The addition of the e-signature piece provided the final impetus. “Our volume and production is through the roof from a dollar standpoint, with the same core team,” Miller explained. By year-end 2017, the credit union’s business loan portfolio totaled nearly $190 million. Just a year prior, the department’s 15-person commercial lending team closed $74 million in loans, which at the time was considered their highest production on record.

The credit union also experienced some efficiency gains. Coordinators, who used to spend 22 minutes preparing paperwork for signing, cut that time by 50%; lenders used to spend an average of 54 minutes closing a loan. “That now takes no time at all,” Miller said.

Another credit union, the $2.1 billion, Spokane Valley, Wash.-based Numerica Credit Union, wanted to escalate its business lending program as well.

Ken Plank, chief lending officer for Numerica, which has almost 140,000 members and 21 branches throughout central and eastern Washington and the Idaho panhandle, recalled, “Senior management and the board saw the benefit in commercial lending, and the decision was made back then to expand.” This included adding good quality staff, diversifying the credit union’s portfolio away from just investor real estate, and using technology to gain efficiencies. That is where the credit union’s partnership with ProfitStars, a global division of the Monett, Mo.-based Jack Henry & Associates, really kicked in.

The credit union raised its outstanding loans from $75 million to $600 million in about five years. ProfitStars, which innovates software, solutions and technology, provided the integration on a variety of platforms to help Numerica better serve its members and support that growth pattern, according to Plank. “Our goal has been a cohesive member experience from first contact all the way through portfolio management.”

Numerica started working with ProfitStars for imaging solutions in 2011. The next year it added remote deposit capture. While looking at options to streamline its business lending process, the credit union also added ProfitStars’ Commercial Lending Center suite. Plank noted this was an easy decision because the suite integrates so well with Numerica’s in-house core, Symitar Episys.

“ProfitStars’ Commercial Lending Center Suite is a SAAS digital lending platform that enables lenders to create, fund and manage their relationship for the entire lifecycle of the business customer, from one loan experience to the next,” Terry Renoux, group president of ProfitStars Lending Solutions, said. The suite offers relationship-based lending, incorporating all-digital loan origination, decisions and portfolio management workflows.

Prior to the ProfitStars collaboration, Numerica operated more than three systems to process commercial loans in each one of its divisions. The operation silos caused delays in processing times along with overall inefficiencies. “ProfitStars was able to show Numerica the operational efficiencies that can be created and valued by creating one platform,” Renoux explained. He added an open API and the ability to integrate to other systems assists in establishing one login and one commercial platform, which results in the best way to service the credit union’s members.

The Commercial Lending Center Suite integrates with multiple core systems and is core-agnostic. “Even credit unions that do not have Symitar cores can take advantage of the benefits that an integrated solution provides,” Renoux said.

The transformation not only helped spark significant growth in commercial lending, it allowed Numerica to expand into other market segments such as Egg, as well as commercial and industrial. “It opened a lot of doors for us,” Plank pointed out. “It just kind of pulls everything together for us and just adds a lot of efficiencies.”

In addition to the Commercial Lending Center, the credit union is looking to implement other ProfitStars modules such as quick processing and decision making to streamline its small- to medium-sized businesses lending; and LoanVantage, a CRM platform capable of tracking interactions with potential borrowers.