By Roy Urrico
Greenwood Village, Colo.-based Origence Lending Services, a business process outsourcing (BPO) organization, seeks to provide smart outsourced (or “smart-sourced”) lending services to help credit unions. The CUSO’s solutions include full-service loan underwriting, processing, call center services, letter generation, funding support, and additional origination services.
Origence Lending Services, a division of loan origination tech provider Origence, is a result of the 2022 rebranding of CU Direct Connect. “We provide lending services for approximately 155 credit unions today. We do all kinds of lending services and are creating new services all the time. But our core business is auto lending, both indirect and direct loan processing and underwriting,” Origence Lending Services VP Enterprise Solutions Bob Nealon told Finopotamus. He noted they also can handle other lending activities for credit unions such as automotive leasing and merchant point-of-sale lending programs..
Nealon sat down with Finopotamus to explain how Origence Lending Services allows credit unions to meet shifting lending demands, complement existing capabilities, and redirect resources to pursue new growth opportunities.
How Credit Unions Utilize Origence Lending Services
“There's a wide range of services we can provide a credit union to help them create efficiencies and take advantage of new processes and new technology,” Nealon indicated. He pointed out some credit unions use Origence Lending Services for entire loan processing activity to funding the loan, while others use the BPO just for the initial funding review of a loan package.
“We see if all the documents are in the package, if they are all completed properly, and maybe give that first evaluation of the package. Then the package goes back to the credit union to finish the process,” said Nealon. “We have some credit unions that are using (Origence) to leverage some pretty good AI (artificial intelligence)-based technology where we can have a credit union push all of their funding packages (automatically) over to Origence Lending Services.”
Nealon explained, “We call it stacking, we have an AI-driven system, (that) makes sure all the documents are there based on what the credit union wants, and sends those docs back to the credit union to create efficiencies for them.”
Biggest Issues Affecting Credit Unions
One of the things that Origence Lending Services has seen from credit unions lately is staffing challenges caused by the fluctuation in business, observed Nealon. “We've been in a rate environment now over the last year where rates have gone up. Liquidity's been tight, credit union volume has shrunk, especially on the automotive indirect side. But things are changing. Liquidity is starting to loosen up a little bit. Credit unions have seen some runoff. They are going to need to start ramping up their portfolios again. And managing that increase in business can be tricky. Because you have to start ensuring that if you start taking rate actions and your business starts to pick that you are properly staffed for that.
“We're seeing more and more credit unions start to think about what happens when business starts to grow again,” said Nealon. “We need to be ready for that and maybe we don't want to hire more people.”
Nealon provided an example of a multi-billion-dollar California credit union seeking Origence Lending Service’s help in the spring to compensate for seasonal staffing issues. “They said, ‘We know what's going to happen over the next couple months.’ They are going to have staff members take vacation. And every year they basically ramp up through temp agency hires to cover that.” Nealon explained the credit union knew outsourcing with someone like Origence Lending Services made more sense because the amount of time and effort it takes to train a temp who never really gets the results they are looking for to handle that business.”
If a dealership sends a credit union a loan package and the credit union do not fund that loan in an efficient manner because of staffing issues, that is going affect the credit union’s productivity and business relationships, Nealon cautioned, “And the same holds true in the direct side. If you fall behind in your processing and your members are waiting for their loan process to be completed and get their money, that's poor member service.”
Nealon added, “At the end of the day we all live in the Amazon world, and we expect to be able to buy things and pay for things and in some case finance things quickly with no friction. (And) we want to do it digitally.”
Smart-Sourcing
Origence Lending Services is a great way for credit unions, especially credit unions that are already partners with Origence, to expand their capabilities and prepare business vicissitudes, Nealon suggested. “There's a lot of opportunity out there for credit unions to be more efficient in what they do and more effective when it comes to the technology tools.”
Nealon cited a Finopotamus article that referred to a team of smart-sourcing agents that augment in-house teams and provide additional departmental support. “I loved the term smart-sourcing instead of outsourcing.”
He explained most credit unions know what outsourcing means. But smart-sourcing responds to specific fluctuations in business. “One of the common services that credit unions have been coming to us for is partial processing. So, overflow nights, weekends, holidays or in the case of the credit union in California, temp workers over the summer.”
Nealon added some more context of how partial processing might work. He described it as overflow processing whereby credit unions are still processing loans, but have Origence Lending Services handle a portion of the loans on a regular basis. “The beauty of that is Origence Lending Services gets to know the credit union’s policies, procedures, the way they do things. We can adopt their practices, specifications,” he said. “In some cases, we work in their system or they may already be using one of our systems, and then over time, when they experience that spike in business, they can just ratchet up the amount of services that Origence Lending Services will provide them, rather than have to hire more people.”
Not All or Nothing
Nealon declared the BPO is “just here to help credit unions. We are a multi-credit union owned CUSO. Everything we do is to try to help credit unions.”
It is not an all or nothing situation, said Nealon. “It is trying to get to that perfect staffing situation where some fluctuation in business happens and you maintain that efficiency. Every credit union has a different risk tolerance. It is getting to that optimal formula where you can be really efficient but be ready for those declines or especially those spikes in business activity.”
Nealon explained, “There is going to be systems, situations that are different with each credit union. On the system side, we have quite a few credit unions that are already partners of ours using (Origence) loan origination system products. If they are already using our loan origination system products, implementing an Origence Lending Services engagement is pretty easy. But we have adopted the capabilities to work with other external systems as well. We have the scale now and the experience with all of the major loan origination systems.”
To keep pace with member expectations and market demand, Origence Lending Services expanded coverage hours in 2023 to offer processing six days a week and underwriting 24/7 for 362 days each year. Extended hours not only allowed Origence Lending Services to serve credit union members better, but it also provided the additional support necessary for its new subsidiary, FI Connect.
The Greenwood Village, Colo.-based FI Connect, a national lender, enables credit unions to remain competitive in a market increasingly favoring embedded financing, according to Origence Lending Services. This model was designed lets buyers choose their financing directly at the point of sale, often online. When FI Connect originates a loan, it instantly establishes a membership for the borrower and then sells the loan to one of its credit union partners. Tesla named FI Connect as a preferred lending partner joining a list that includes Chase, Wells Fargo and Ally.