With an accelerated migration to digital services, financial institutions globally are rising to the occasion with competitive, never-before-seen services that consumers are readily adopting.

However, for smaller institutions with a finite budget, that task isn’t simple.

On this episode, David Brand, Senior Vice President of Lending Operations at Sharonview Federal Credit Union joins us to talk about the tactful methods they’ve developed to not only create a space for themselves in the market, but to set themselves apart from the rest.

You’ll learn about…

• The importance of educating customers on self-service capabilities
• Applying automation and technology to back-end processes
• Managing indirect and direct vehicle financing
• Outsourcing financial services to partners

Education for self-service

Brand explains that brick and mortar operations still have a place for more complex transactions, but Sharonview is adding something different to the mix.

“We've got to show them, educate them, and train them on the self-service aspect of the transactions,” he says.

If a financial institution can train a majority of their customers to take matters into their own hands online, that’s a definitive marker of success.

Brand states that if 80 percent of an institution’s clientele opt for self-service, and the other 20 percent don’t, it’s up to them whether or not they should create a unique business model for that minority.

Applying technology to the back-office

In terms of progression, smaller credit unions like Sharonview are focusing their efforts on back-end processes.

Brand and his team understand that in order to optimize their budget, they need to enhance their application technology and automation capabilities for behind-the-scenes operations.

So how can financial institutions of all kinds develop their back-end systems as intentionally as their consumer-facing interfaces?

Automating with AI

Sharonview has turned to outside sources to help them with automating their lending applications—typically an resource-consuming, high touch process. 

Plaid, for instance, is a partner who has assisted the credit union with income verification tools to get the job done quickly and efficiently.

Sharonview also works with a company that leverages pure AI to review and decide whether a loan application is viable by pooling alternative sources of data into different decision points automatically.

Accessing and reviewing credit data

Sharonview leverages a robust intelligence team and Power BI dashboards to collect and analyze data points on a daily basis.

While automation has picked up speed in the back-end, Brand insists that they, “can’t set it and forget it”.

Monthly credit reviews are scheduled to review, interpret, and validate data in order to make informed business decisions.

Indirect/direct vehicle financing

Sharonview’s approach to AI implementation isn’t the only attribute that sets them apart from their competitors.

Vehicle financing, a notoriously difficult space to enter, has become a critical part of their loan growth.

Due to the competitive nature of the auto loan industry, many institutions are offering compellingly lower rates.

However, Sharonview approaches the challenge in a few unique ways.

According to Brand, the credit union leverages an indirect channel to source loans from vehicle dealers, an internal branch channel, and an online channel to collect data in order to holistically analyze auto loan performance and adjust pricing accordingly.

With the addition of AI, Sharonview is able to create a true and holistic picture of a risk profile by gathering multiple forms of data points from both the banking and lending side and using it to expand their lending services to new markets.

Brand and his team have also found success in working directly with auto brokers to tap into their current customer and lead base and create a targeted marketing funnel for those specific consumer groups.

Since 2020, Sharonview has experienced a 50 percent increase in their production rates.

Outsourcing services

Brand is also enabling Sharonview’s growth through outsourcing.

For smaller institutions like credit unions and community banks, outsourcing certain operations to bigger organizations is key to thriving on a small budget.

“We sold our credit card portfolio to Elan Financial Services. And starting about a year ago, they began to issue on our behalf as well,” says Brand, “so it's a white label program. It's been a great partnership because they were able to help us step up with many new cards that we wouldn’t have been able to bring the market for years, probably if we tried to do it ourselves.”

Outsourcing in this case, was critical to Sharonview’s success as it provided safer controls around fraud and promised to protect card holders.

Similarly, the credit union is working with Upstart to launch an efficient, streamlined personal loans program.

As Jeff explains, “consumers are particular when they're in a self-serve mode, looking for the most efficient, frictionless, seamless, fastest process”.

Sharonview understands the immediacy their clients are seeking and are making strides to make it possible.

Rise in home equity loans

With eyes always on the horizon, Brand and his team are constantly analyzing developing consumer trends and considering new product angles.

Due to a noticeable rise in mortgage interest rates over the last six months, mortgage refinancing has slowed considerably.

Since the pandemic, many consumers have been remodeling their homes—major projects that might exceed the amount a personal loan can grant.

Sharonview has seen a 50 percent rise in applications for home equity line of credit.

“People have this equity, and then they're tapping into it,” says Brand, “because home prices are high, there's no incentive for people to sell.”

That empowers homeowners to invest in their current spaces and make it into an environment they want to live in.

Stay tuned for new episodes every week on the Leaders in Lending Podcast.