Automated decisioning processes among top priorities for auto lenders

Speeding up credit decisions is becoming a major competitive point among auto lenders trying to woo dealership clients. Two of the largest U.S. auto lenders, Wells Fargo and Ally Financial Inc., say automating decisioning is among their top priorities in 2020.

Ally CFO Jenn LaClair said the lender rolled out a project across its auto business in 2019 that “materially” cut down on time for automotive loan origination decisioning.

“We want to not only offer speed, but also offer that in-touch, personal connection with the dealer,” LaClair said. “We do think the more that we know the dealer, we know their specific challenges and opportunities, we can partner with them.”

While Ally says it doesn’t have a threshold on automating the decisioning process, Wells Fargo is pushing to increase its automated decisioning to 60 percent.

Executive Vice President Laura Schupbach, head of Wells Fargo Auto, told Automotive News that at least half of decisions in 2019 were automated, compared with 25 percent in 2018. That’s expected to climb to 60 percent early this year.

How much higher can it go? “I’m not sure,” Schupbach said. “We’ll work with our credit partners to figure out what the sweet spot is there.”

The reason, she said, is that for less-creditworthy customers, the underwriting process is more complex. Too much automation could mean that some of the trickier cases might be decided too quickly. Because of this, Wells will always have a certain amount of manual decisioning, Schupbach said.

“We definitely want one of our underwriters looking at those deals and working with the dealer to see if there is a way we can get the deal done that’s good for the customer and good for the dealership,” Schupbach said.

Cutting down on time-to-fund is critical for lenders to retain dealership customers and attract new ones. If a lender leaves a deal hanging, dealerships are likely to seek funding for their customers elsewhere.

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