Harborstone Credit Union has managed to increase its small business loan volume by 250%—with no delinquencies—since deployment two years ago. I recently had the chance to talk with Jeff Ivey, Harborstone’s Senior Vice President and Chief Sales and Service Officer, about how the credit union has used the FICO® Small Business Scoring Service℠ (or SBSS℠) solution to streamline its small business loan process, making things better and easier for both Harborstone and its members. Based in Tacoma, Washington, Harborstone Credit Union serves more than 75,000 consumer and small business accounts through its 16 branches.
Q: What makes Harborstone different from other credit unions and commercial banks?
Jeff: Our customer focus is our prime differentiator. We’re smaller than some competitors, we’re fully member owned, and we make sure that every member gets personal attention and feels like a part of Harborstone, not just an account number on a statement. We also got into business lending early—about 20 years ago—starting with commercial real estate and then moving on to larger business loans. It’s only been in the last few years that we’ve been tapping the potential of the small business side.
Q: What are the biggest obstacles you’ve faced getting that small business program going?
Jeff: The main challenge was our own processes, which were largely manual and didn’t account for the size of the loan. It didn’t matter if it was for $50,000 or $5 million—they all went through the same one-size-fits-all process. It just wasn’t an efficient way of doing things, especially for smaller loans. We needed to introduce automation to streamline the process while maintaining—and even strengthening—the great relationships we have with members.
Q: So what was your solution, and how are the results?
Jeff: After looking at several options, we implemented the FICO Small Business Scoring Service solution, initially for loans under $50,000. We’ve cut our decision time on those loans from days or weeks down to minutes or hours, and we’ve seen small business loan volume increase by 250% with no delinquencies since deployment two years ago. Thanks to the process efficiencies we’ve introduced, we expect that number to go even higher.
And the quality of the decisions we’re making is excellent—in two years, we’ve not had a single delinquency in that category. We’re now looking at automating loans as high as $100,000, which we’ve seen other FICO customers do.
Q: What’s been the response from your customers?
Jeff: The increase in loan volume is a good indicator that they’re pretty happy with the service we can provide them now. What’s great is that we’ve not only expanded our small loan customer base, but we’ve even won back customers who left us because they were frustrated with the delays that our old, manual workflow caused. In one case, a member’s new banking institution promised some things they couldn’t deliver, and when we showed them what we can do today with SBSS℠ solution, we got them back.
Q: Why did you decide to use FICO Small Business Scoring Service?
Jeff: FICO was recommended to us by our consumer loan solution vendor. That recommendation carried a lot of weight, but we still did our due diligence and looked at what other FICO customers were doing, and we saw that they were very satisfied. What sealed the deal for us was finding out that the Small Business Administration uses SBSS solution for some of its decision making.
The FICO team was great to work with. They helped us customize our existing consumer loan interface to make it very easy for branch employees to handle both consumer and small business loans. FICO is an innovative, stable company that we know will be there for us in the years to come. They’ve supported us every step of the way, and we’ve not had a single major technical problem with SBSS solution. We couldn’t be happier with our decision to go with FICO.
I’d like to thank Jeff for taking the time to speak with us. If you’d like to learn more about how Harborstone is using FICO Small Business Scoring Service solution to manage risk, read the case study.