Digitizing Credit Originations at SunTrust
Origination Manager used as underwriting engine and workflow manager
Earlier this year at FICO World 2018, we held a session with SunTrust about how they rebuilt their origination process to become truly customer-centric.
SunTrust set about digitizing credit originations to implement an origination system that offered the path of least resistance for customers, and in the process also rebuilt its existing business processes.
SunTrust wanted to deliver a significantly simpler and more engaging experience for their customers. The result has been an origination process, infused with automation and self-service communication capabilities, that has enabled the bank to wildly outperform their most optimistic ROI projections.
Check out this short video where Angela Baker, senior vice president, business lending & payment solutions group product manager at SunTrust explains why optimization was a priority for the online retailer.
Digitizing Credit Originations To Meet Customer Expectations – Transcript:
Angela Baker, senior vice president, SunTrust
What was the challenge facing SunTrust? Sun Trust is located in Atlanta Georgia. We have 1300 branches. Businesses do their banking during non-traditional banking hours, so they need a digital presence. Other challenges that we face are 100% automation from the non-bank disruptors. They are able to fund loans very quickly and we need to be competitive with that, we need to be in to be with the digital environment.
Describe some of the loan origination issues? We had a 30 percent drop-off rate from the time an application was submitted. A 30 percent drop-off just in missing documentation and the client never creating the documentation needed and dropping it off at the branch, it was too much of a hassle. They could go to our nearest competitor and digitally upload what they needed to, to continue with that application. We didn’t provide that.
How did implementing FICO Origination Manager help? In 2014, we selected Origination Manager as our underwriting engine and workflow manager. What that allowed us to do was to develop a solution that could give us consistency in our credit writing capabilities, eliminate our exception process. FICO basically, in a very collaborative and nurturing way said, we’re gonna get you guys on an agile framework, we’re gonna get you guys to the point where the solution can be done. We went from a 90% exception rate down to 6% exception rate and also broke up the friction that we were experiencing not just with our salesforce in the branch network but also operationally our back office had no way of talking to branches to know when was an application submitted and so we keep the application rolling.
What changes did using FICO Customer Communication Services bring? With the FICO solution we were able to implement the customer communication services. What that allows us to do, is allow the banker the opportunity to send documentation required to the business and then the business to upload their documentation back to the bank. It allows the process to be seamless and still automated. It allows the business to upload the documentation when they have the time, not waiting for a time to walk into a branch with the documentation. And it also allows to be immediately notified when we receive documentation, so that we can continue the application process.
What results have you seen? With implementing the origination platform we were able to track every single application. We have also grown year over year from 2017 to 2018, year over year 50% higher in new accounts booked and that’s a huge accomplishment.
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I further broke this down by looking at the characteristics of the youngest 15% in each group, which occurs at age 29 for the 750-799 group and 43 for the 800-850. We used FICO<strong>®</strong> Score 9 for our analysis, and examined typical variables of the categories that go into the make-up of the score.</p> <p><a href="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png"><img class="alignnone size-full wp-image-29367" src="http://www.fico.com/en/blogs/wp-content/uploads/2016/10/FICO-Score-High-Achiever-table.png" alt="fico-score-high-achiever-table" width="715" height="747" /></a></p> <p>Since there’s a lot to dissect in this chart, I’ll highlight a few findings that struck me: <ul> <li><strong>Credit history.</strong> Higher scores are undoubtedly associated with a longer time on file. What’s striking is the higher average time on file for the 800+ group, both overall and for revolving accounts (the most common trade line). 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While 23% of the national population have collection items greater than $99, the figures are only 0.5% for the 800+ group and 3% for the 750-799 group. It is clear that, in conjunction with starting a credit file early, paying on time is a key trait of the FICO® Score high achiever.</li> <li><strong>Balance and utilization.</strong> Finally, we look at how credit is being used, focusing on revolving product use. (Since most people only have one mortgage or one auto loan, variation in instalment product figures is minimal and driven by payment history, which is near perfect for high scorers, as we’ve seen.) FICO® Score high achievers tend to have more open revolving accounts. While the % active trades and utilization are generally lower, by no means do high scorers avoid the use of credit products. What drives the difference here is the amount of <u>available</u> revolving credit utilized. 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It ain’t rocket science!</p>
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