How a Digitally-Savvy Credit Union Grew Loans and Members with AI
Deeply personalized member service has been a focus for Sharonview Federal Credit Union since 1955. However, once COVID struck, the credit union knew they had to seek out new partners and channels that could provide the digital service their members wanted.
During the pandemic, Sharonview’s executive team saw a spike in mobile transactions on both the deposit and lending side, indicating that member preferences were evolving toward digital. Furthermore, these members were seeking personal loans to meet their household needs, including consolidating and paying down debt.
Finding a leading personal loan partner
Sharonview’s own personal loan platform required a tremendous amount of manual effort for both the credit union staff and members. The process required a hard credit pull followed by manual underwriting – over 65 percent of applications resulted in manual review. Even then, these applications resulted in counteroffers that did not meet the members’ loan requests. As a result, only 20 percent of these personal loans were getting funded.
In 2022, when traditional loan demand for mortgages began to decline and personal loan demand rose with stimulus drying up, the executive team knew they had to act.
Sharonview had been evaluating options for personal loan platforms for some time, but became aware of Upstart when a member of its executive team got an Upstart loan and was impressed with the ease of the process.
David Brand, Senior Vice President of Lending Operations, explained that the soft credit pull was a deciding factor of the partnership, as it removed the angst out of the application experience. “The beauty of the platform is in control. There’s a soft credit check, and the system will tell [the applicant] how much they can borrow, and if the applicant is still interested, then the application will perform a hard credit pull.” This also allowed the credit union to get to funding much quicker than ever before.
Additionally, by leveraging Upstart’s marketing, Sharonview could cast a wider net outside of its branch network to grow loans quickly while serving more members throughout the region – a strategy the credit union had pursued for other products via fintech partnerships, including credit cards and home equity lines of credit. “We knew we could turbo boost personal lending with this partnership,” Brand said.
Finally, Upstart aligned with Sharonview’s mission to expand access to credit while mitigating fraud levels. Synthetic fraud, when fraudsters use a combination of stolen or fabricated data to create identities, has been on the rise for years. Brand explained that having a very ‘well-scrubbed’ application up front put the compliance team’s mind at ease.
Getting the internal teams on board
Throughout the due diligence process, Sharonview’s compliance and risk management team was impressed with Upstart’s thoroughness and documentation about its model. “The processes were sound and well-documented, and it was easy to get our compliance and risk management staff comfortable,” Brand described.
Prior to launch, a huge focus for Sharonview’s team became training its member-facing staff on the new technology and the value it would bring to members. By automating the personal loan process, the Sharonview staff now had more time to advise members on their long-term, financial well-being.
“We went from an average of $1.5 million a month in fixed-term personal loan lending to $10 million a month immediately, without any heavy lifting or having to add any additional staff.”
Senior Vice President of Lending Operations
After passing through due diligence, Sharonview was able to go live on the Upstart Referral Network in just 66 days. With the Upstart Referral Network, available at Upstart.com, qualified personal loan applicants who meet Sharonview’s credit policies will receive tailored offers as they seamlessly transition into a Sharonview-branded experience to complete the online member application and closing process. This was closely followed by launching the white label solution for personal loans on their credit union website. These two solutions enabled Sharonview to offer personal loans to new members while also serving existing members’ needs.
Acquiring new loans and members with AI
Given the accuracy of Upstart’s underwriting model, Sharonview opted to go-live without a FICO Score minimum. This decision was grounded in the configurability of Upstart’s parameters, including the ability to adjust loan volume, loss rates and returns. Additionally, Upstart’s account management team met with Sharonview multiple times a week to discuss the program before scaling back to a monthly cadence – a factor that strengthened Sharonview’s trust in the program given uncertain macroeconomic conditions, including rising rates and inflation.
“We have a monthly credit review committee that meets and looks at the portfolio. We look at trends and make decisions about pricing and underwriting. We’re focused on reviewing the data and making good decisions around it,” Brand said.
By closely monitoring and revisiting these parameters, Sharonview was able to scale loan volume and membership rapidly. “We went from an average of $1.5 million a month in fixed-term personal loan lending to $10 million a month immediately, without any heavy lifting or having to add any additional staff,” Brand explained.
“The Upstart and Sharonview Credit Union application process was short and easy. You get a decision in seconds! You receive your funds in a timely fashion and they offer you flexible payment options.”
-June 2022 Sharonview FCU Trustpilot Review
Since going live, Sharonview has also acquired over 1,500 new members to expand relationships with. “There is a strong demand for personal loans now that stimulus has receded, and there are plenty of well-qualified borrowers,” Brand added.
After training its member-facing team on the program, the Sharonview team observed that members are highly receptive to the new automated process. One borrower writes, “The Upstart and Sharonview Credit Union application process was short and easy. You get a decision in seconds! You receive your funds in a timely fashion and they offer you flexible payment options.”
On the horizon
Looking to the future, Sharonview hopes to work with Upstart’s account management team to improve pull-through rates on its white label solution. As such, Sharonview is actively exploring Upstart’s Marketing Advisory Services to understand how to best market the personal loan product to existing members.
Outside of Upstart, the credit union is also aiming to improve its transactional self-service capabilities and expand its virtual branch network in an effort to increase member engagement.
Leaders at Sharonview, including Brand, are confident that the Upstart partnership will enable the credit union to continue down the path of partnering with best-in-class providers. “This is a great example of a fintech being able to do something better and more efficiently and will help serve more of our members effectively,” Brand said.