Nov 4, 2022 Case Studies
How Randolph-Brooks Federal Credit Union Says YES to More Car Loans
Randolph-Brooks Federal Credit Union loves helping its members achieve financial success. Historically, RBFCU had been fairly conservative with its underwriting; however, the credit union wanted a way to reach more members by digging deeper into near-prime and non-prime consumers. To achieve this, they turned to Open Lending.
Heather Sullivan, Senior Vice President of Consumer Lending at the $9.3 billion Randolph-Brooks Federal Credit Union, located in Universal City, Texas, explained that RBFCU wanted to reach out to more members, particularly those underserved by traditional financial institutions. Auto loans are especially important for low-income families that need reliable transportation for getting to work, school, or doctors’ appointments and other daily endeavors.
“We have always been an advocate for our members,” Heather said, “but when it came to underwriting, we were always very conservative and wanted to be more inclusive and wanted to increase our car loans.” She emphasized that it was important to RBFCU to find a partner with vast experience in the non-prime auto lending market, “We felt more comfortable going with Open Lending rather than entering uncharted waters by ourselves.”
Mainstream news outlets and others are frequently reporting on the dangers of non-prime lending. However, Open Lending’s flagship product, Lenders Protection™, provides a safe way for lenders to increase near and non-prime auto loan volumes and yields without adding risk to their loan portfolio. The Lenders Protection™ risk management program also features default insurance coverage and allows financial institutions to model their specific overhead and funding costs and set a target ROA for their insured portfolio. This results in a profitable auto loan portfolio with carefully managed pricing and risk characteristics.
“We felt more comfortable going with
Open Lending rather than entering
uncharted waters by ourselves.”
- Heather Sullivan
SVP of Consumer Lending, RBFCU
RBFCU explored various loan decision engines and was fascinated with what Open Lending had to offer. “We were really impressed with the decision engine because it brings in dierent statistics and alternative data,” Heather said. “Open Lending has been great about explaining what [the information is] telling the credit union. We see data that piqued our curiosity and analytics that have a story to tell.” Open Lending also shares trends it finds across its copious client data to influence strategy.
“Open Lending’s vast experience in the non-prime lending market, across hundreds of financial institutions, allows us to bring a wealth of knowledge to each of our clients,” said Matt Roe, Open Lending’s Chief Revenue Officer. “That really helps us guide our clients toward the path to success in a market where few have expertise and a winning track record. Randolph-Brooks has really taken our insights and consulting and run with it.”
The results have been outstanding! RBFCU approved 17,177 loans in 2018 that it would not have approved without Open Lending’s Lenders Protection™ program. In 2018, these loans equaled $109 million of RBFCU’s $400+ million in auto loan growth. RBFCU’s total return on investment in the Lenders Protection™ program was 3.85%.
More importantly, the program is not just financially successful for RBFCU. It has helped all members feel valued and employees feel like they’re making a dierence. “Lenders Protection™ helps our credit union to make more respectable loans to our members. When we considered what we’d been doing, we looked at the data and many cars were low-priced and reliability was questionable,” Heather explained. “Now, with Open Lending’s Lenders Protection™, RBFCU is able to make higher-dollar loans for cars that tend to be more reliable, and it helps families be more successful in getting loans.” To the member, the application process for a loan with Lenders Protection™ is identical to a standard auto loan. This allows members with lower credit scores to be treated with the same respect as someone with a higher credit score.
RBFCU employees are becoming ambassadors for the program, Heather said. “Our employees like being able to say ‘yes’. They’re hearing from the members and feeling for the members. They love to get involved in what they’re trying to accomplish and save them money without going to a buy here-pay here. It helps them feel good.” she said. By empowering their employees, they are creating an even more positive experience for their members.
On the occasion when members are unable to fulfill their obligations to repay the loan, RBFCU follows its standard collections process. The credit union allows a 15-day grace period, and then starts making calls to engage the member to help them successfully catch up. It also has a skip-a-pay option for short-term hardships. “Our goal is not to repossess the vehicle. We want to try to help them be successful,” Heather said.
Open Lending remains actively involved with RBFCU. Open Lending team members facilitate onsite trainings for the credit union’s 170-person call center sta and underwriters, and dedicated Account Managers provide updated data and an analysis of how it aects its portfolio. Heather considers Open Lending’s ongoing support combined with the road-tested data and analytics utilized in the Lenders Protection™ program as the recipe for a “fantastic partnership.”
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