Acquiring new loans and members with AI:
AgFed’s Success Story
Headquartered in Washington, D.C., Agriculture Federal Credit Union (AgFed) has been serving the needs of its members nationwide for almost 90 years. As consumer expectations for quick access to capital and seamless digital experiences grew, AgFed knew they had an opportunity to grow its membership while expanding its share in personal loans.
However, as a smaller credit union with an older member base, their own members did not have a need for personal loans, and AgFed was looking to increase their approval rates without taking on more risk. Thus, they knew they needed to partner in order to acquire new members and compete through an improved personal lending experience.
Once the pandemic struck, AgFed was faced with more challenges: larger credit unions were only growing in size, making it more difficult to compete, and member experiences needed to be all digital. At the same time, internally, AgFed’s labor-intensive processes were costing more in resources than they were getting in returns. Leaders at the credit union knew it was time for a drastic change.
Avoiding paralysis by analysis: Finding the right partner
AgFed began researching several fintech options, including buying participations, but Margie Click, AgFed’s President and CEO, knew there had to be a better option. “Instead of buying participations, I thought, ‘why would I do that?’ I’d rather have more control, gain members and get a better return,” Click said.
In addition, they wanted full control over credit policy and an automated, digital experience that would enable them to attract and acquire new members.
When the team learned of the Upstart Referral Network for personal loans, they saw an opportunity to combine a best-in-class member experience while leveraging Upstart’s nationwide marketing program to bring in new members. This would help them achieve loan demand that exceeded what they could generate alone. Additionally, with Upstart doing the servicing on AgFed’s behalf, they would not need to allocate additional resources.
“Instead of buying participations, I thought, ‘why would I do that?’ I’d rather have more control, gain members and get a better return.”
President and CEO
The AgFed team took care to ensure that all the stakeholders across IT, risk and lending were involved in the due diligence process from the beginning, allowing the team to view demos and ask questions upfront. Even as a more conservative credit union, AgFed was impressed with Upstart’s thoroughness and professionalism throughout the due diligence process, especially with regards to its AI underwriting model.
Click explains that the team did a lot of their own internal research on how AI could improve access to credit and knew this would be a strong opportunity to differentiate themselves and acquire new loans and members. “You could no longer sit there with paralysis by analysis – you had to make some quick decisions and embrace change,” explained Click.
Once AgFed decided to move forward with the Upstart Referral Network for personal loans, they were able to go-live in just 54 days.
“You could no longer sit there with paralysis by analysis – you had to make some quick decisions and embrace change.”
President and CEO
Expanding credit access while maintaining full credit policy control
One of the clear benefits AgFed saw with Upstart were the multiple levels of control they had, including setting and adjusting loan volume targets, loan amounts and credit policy at their discretion. “There were a lot more criteria than we expected, so it was very helpful and made us comfortable taking the next step,” Click said. Having these guardrails and boundaries allowed the leadership team to pick the criteria they were comfortable with and stay within their own risk parameters while setting the appropriate growth targets.
Since going live, AgFed has originated over $7 million in loan volume and acquired over 400 new members. Since Upstart is servicing the loans, AgFed wanted to automate the new member process, and the team created a tracking record on their core system to link the new members to the Upstart relationship.
AgFed has originated over $7 million in loan volume and acquired over 400 new members to expand relationships with.
Another benefit of the Upstart partnership has been AgFed’s ability to lend to previously underserved members. “We are providing loans that we wouldn’t have approved without Upstart’s model,” Click said.
Since going live, AgFed has also lowered its minimum FICO score from 640 to 600 without increasing losses. “I feel very comfortable supporting the underwriting model that Upstart uses, very comfortable. It’s not just me, but also my VP of Risk,” Click said.
“I feel very comfortable supporting the underwriting model that Upstart uses, very comfortable. It’s not just me, but also my VP of Risk.”
President and CEO
Future expansion opportunities
As AgFed looks to the future, they have expanded their lending footprint from Virginia and D.C. into five additional states – Kentucky, North and South Carolina, Tennessee and Delaware. Though AgFed serves all members, they were looking to specifically target USDA workers and worked alongside Upstart to identify states with high USDA employment.
“People want an Amazon-like experience for whatever they deal with, and that goes for banking too. It’s been such a seamless experience, and we’ve been very pleased with the Upstart relationship.”
President and CEO
Eventually, AgFed plans on expanding its footprint with Upstart nationwide. Additionally, AgFed is discussing expansion in Upstart’s automotive refinance product to help save their members money on their auto loans with the same seamless experience offered for personal loans.
For now, AgFed looks forward to a successful future with Upstart that allows them to acquire new members while serving their needs. “People want an Amazon-like experience for whatever they deal with, and that goes for banking too,” Click explained. “It’s been such a seamless experience, and we’ve been very pleased with the Upstart relationship.”