How The Atlantic Federal Credit Union is
Exceeding Membership Goals in an
Uncertain Economic Climate
In an environment characterized by high inflation and rising rates, many lenders tend to tighten their credit policies. However, credit unions like The Atlantic Federal Credit Union (The Atlantic) are stepping in to foster the financial well-being of its members with the help of an AI lending partner.
As a community-chartered credit union and low-income designated institution, The Atlantic is focused on serving its members locally within Union and Essex counties in New Jersey.
However, due to the macroeconomic uncertainty, the credit union began vetting fintech partners that could help them grow membership and lead with credit during a time when its communities needed it most.
Finding the right partner to expand membership
As The Atlantic began their fintech partner search, they knew they wanted a partner that used AI and machine learning for credit decisioning in order to expand their ability to approve more borrowers while limiting losses. Additionally, the credit union wanted to find a partner that could exceed their borrowers’ digital expectations and provide a streamlined, modern process.
A partnership search led them to Upstart and the Upstart Referral Network, a program where qualified personal loan applicants on Upstart.com who meet The Atlantic’s field of membership requirements and credit policies receive tailored loan offers from the credit union.
The Upstart Referral Network enables new, qualifying credit union members to transition into a The Atlantic-branded experience, complete with digital application, closing and fast funding.
Training the internal teams
The team was impressed with the program’s configurability and that they could tailor their underwriting structure to their own guidelines. Since the credit union was already involved in several fintech partnerships, their progressive board understood the value a fintech partnership would provide and decided to move forward with the program.
Prior to go-live, The Atlantic’s leadership team held training sessions with their staff on the Upstart solution, walking them through the end-to-end application workflow.
For their front-line and call center staff, it was important to understand how to book the loans and deepen the relationship once a new member was acquired for long term member retention and potential cross-sell opportunities.
When The Atlantic’s team was assigned its dedicated Upstart customer success manager and account manager, the team met weekly with Upstart to align on their KPIs for the program.
Gaining creditworthy members within geographic constraints
Initially, The Atlantic was concerned that Upstart would be unable to meet their stringent membership requirements to only lend to qualifying members within the two counties it serves. However, Upstart has been able to exceed the credit union’s volume expectations and deliver creditworthy borrowers.
Importantly, Upstart’s stringent identity verification process has been able to prevent identity theft and enabled The Atlantic to meet all of their NCUA requirements for the Customer Identification Program (CIP).
Since the members brought in by Upstart have typically been higher income than the credit union's membership base, the credit union has also been able to diversify its membership with Upstart.
“We set aggressive goals and have surpassed those goals in the third quarter. [Upstart} has done a phenomenal job of meeting those requirements. Every member that comes in is within our two counties.”
Jason Reed
Chief Operating Officer
“We set aggressive goals and have
surpassed those goals in the third quarter.
[Upstart} has done a phenomenal job of
meeting those requirements.
Every member that comes in is within our two
counties.”
— JASON REED
Chief Operating Officer
Growing loans and members in uncertain times
With Upstart’s AI-powered credit decisioning models, The Atlantic has been able to expand membership well within or below their expected loss rates in their seven months of partnership. “We set a 3-5 percent loss ratio for these new loans and have actually been at less than 1 percent,” Reed said.
“We set a 3-5% loss ratio for these new loans and have actually been at less than 1%.
Jason Reed
Chief Operating Officer
“Previously, we were using standard underwriting
guidelines based on FICO and DTI ratios," Reed
explained. “With Upstart’s AI, we’ve seen a big
increase in the number of loans approved
with very little delinquency.”
Looking to the future
Given the success of the Upstart partnership, The Atlantic gained approval from its board of directors to continue improving the digital experience of their own organic products to match the experience of the Upstart workflow.
Additionally, with high returns, The Atlantic plans to allocate these funds to improve their marketing efforts to existing members for personal loan products. “In these uncertain times and rising rates that are expected to go up even further, this has worked out well for us because we’re not getting this kind of return for the loans we do internally. We’re able to utilize some of this money to continue marketing to our own members,” said Reed.
The program has been so successful that The Atlantic plans to participate several million dollars worth of Upstart loans out at very favorable rates.
"This has been an incredibly positive experience. We've worked with other vendors in the past, but because of Upstart's eagerness and willingness to help tailor the program to our needs, it's been incredible. Our CEO and board couldn't be happier with the results we've seen," Reed said.