Alliant Credit Union’s In-House Digital Lending Platform Fuels Growth

After committing to a digital-first strategy, the credit union first overhauled its website and mobile banking app, then moved to replace its outdated consumer loan platform with a new platform that both employees and borrowers love. Using an agile team-based approach, Alliant created a fully digital product that is generating impressive results.

With fintechs raising the bar for consumers’ digital expectations, traditional banks and credit unions had better step up they you hope to stay relevant and move the needle.

Which is exactly what Alliant Credit Union did with its new Consumer Loan Origination System (CLOS). The digital platform allows consumers to apply for any consumer loan Alliant offers and take it to funding — completely digitally — with decisions taking as little as 30 minutes.

The initial version of Alliant’s online/mobile origination platform was launched in the first quarter of 2017, with additional functionality and new loan types added in the succeeding months. Jason Osterhage, SVP of lending at Alliant says that by mid 2017, 85% of Alliant’s consumer loan volume was originating through the platform.

By April 2018, all consumer loan types except one had been converted over, including credit cards, new- and used vehicle loans, home equity loans, RV loans, and unsecured loans. As of midway point in 2018, student loans are the only lending product not accessible on Alliant’s new system, something Osterhage says the credit union may add later.

A Digital Experience Everyone Loves

“Fintech lenders changed the game in terms of user expectations. You have to keep pace.”
— Jason Osterhage, SVP Lending, Alliant Credit Union

Osterhage, who has overseen the development and rollout of the new digital lending platform, says feedback from both members and employees has been strongly positive.

“We track Net Promoter Scores,” explains Osterhage in an interview with The Financial Brand. “We compared scores for consumers who used the old platform with those who have used the new platform. There was a 20-point lift in NPS before and after. That’s a large number. We were in the mid-50s range before using the old platform, but we jumped to the mid-70s and stayed there since rolling out the CLOS platform.”

Osterhage believes the change has brought definite workflow efficiencies and a positive reaction from Alliant employees. However, he says the main focus of the upgrade was to improve functionality and customer experience.

“Fintech lenders changed the game in terms of user expectations,” says Osterhage. That, more than any direct competitive pressure, motivated Alliant to up its loan origination game, looking for ways to reduce “friction” and improve the experience.

“You have to keep pace,” he explains.

If there were a net promoter score calculated from employees, Alliant would have received a nice bump their, too, as a result of adopting its digital loan platform. Osterhage says the new software “improves employees’ lives.” There is much less manual rekeying of data and the system presents data side by side for easier comparison, along with providing a variety of tools and features.

“We can respond quickly now to employee feedback,” says Osterhage, including suggestions for improvements. When a suggestion is workable, it can be implemented in a couple of weeks, he says. “Employees really appreciate that.”

In addition, Alliant is now able to make near real-time loan rate changes, and easily update decision rules. The platform also integrates with multiple credit bureaus, which helps Alliant approve more applications.

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New Features, Expanded Functionality

In the current iteration of Alliant’s CLOS system, credit card applications can now close in less than half an hour, and auto loans can be funded the same day. Consumers can track the progress of their applications at any time, can see what documents are required, and can submit all necessary paperwork — and receive documents from Alliant — using a secure email-style messaging system. The same email system allows in-app communications between end users and Alliant staffers. All communications are collected within the CLOS system and become part of the application record, Osterhage notes.

If they wish, consumers can fully complete the loan process through to funding without talking to an Alliant representative. Osterhage says that the ease of doing a “straight through” digital loan depends on the type of loan and the consumer’s qualifications. Collateralized loans (such as an auto loan) are more likely to need human help, he says, but they can be completed without it.

So far the credit union has had more than 90,000 digital applications and has funded nearly $600 million in loans for members. As a frame of reference, Alliant has roughly 400,000 members.

Digital Innovation: Build or Buy? Or Both?

Alliant knew several years ago that its consumer loan platform was outdated; it had almost no mobile capability. Initially, says Osterhage, the credit union looked at vendor solutions, knowing that software development was not a core competency.

Osterhage says the institution “got pretty far down the road with a couple of vendors,” but couldn’t pull the trigger. Management kept worrying about the vendors’ ability to execute, specifically the time it could take to implement considering each tech company’s backlog of work, as well as their willingness to customize the platform.

Alliant decided to build the platform in-house. This option eventually was selected, in part, because the credit union had decided several years ago that it wanted to control as much of its member experience as possible.

Ultimately, about two-thirds of the development resources Alliant tapped to build the app were employees. A handful of third-party developers — most notably North Highland, Mindtree, and Softweb among them — were also brought in for support at critical stages. Some of the vendors helped with strategy, others with coding and related technology work.

Having already had some experience with agile software development in the launch of its upgraded mobile banking app, Alliant used a co-development approach including “concurrent sprints,” “scrums,” and “user stories” along with more traditional (“waterfall”) processes.

The size of the development team varied, says Osterhage, but had a steady core of about 25-30 people (with peaks up to 50) co-located in a dedicated “war room” converted from a large conference room with a Starbucks-style environment. Team members included developers, architects, and product owners from the business side, along with a smattering of employees from the credit union’s vendor partners.

Read More: Can Alliant Credit Union Realize The Digital-First Dream?

Next Steps: Native Mobile App and More Marketing

The current mobile version of the CLOS application is a responsive design using browser functionality, says Osterhage. The credit union’s design team is building a native application for iOS and Android devices. Osterhage would say only that it is slated to be ready in the second half of 2018 or early 2019. The native mobile app would enable the credit union to — among other things — incorporate secure live chat and text messaging capabilities into the loan application process that would become part of the application record.

To date, Alliant has concentrated on getting all its consumer loans onto the platform. It is just now beginning to focus on how it can exploit what it has built. Osterhage says they are starting to ramp up digital direct marketing for specific loan types. In general, marketing will focus on using digital advertising to promote Alliant as a digital-first credit union.

In 2016, Alliant began testing ads beginning on online sites including Pandora, NerdWallet, DepositAccounts, WalletHub, and 20somethingfinance. These sites were specifically chosen for their ability to target the financially savvy, digitally minded consumers that Alliant wants to reach.

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