WASHINGTON–Origence Lending Services has set several goals this year, including addressing myths and informing credit unions of all it can do, including not just expanding loan markets but even becoming a CU’s entire loan department, according to one executive.
Its efforts in 2023 follow years of new product offerings, acquisitions and a renaming of many of its offerings under common branding. One big goal: to make clear it is much more than just an indirect auto lender better known as CUDL, according to President and CEO Brian Hamilton.
“After LendingTech Live (in 2022) we started getting very aggressive about the messaging system, the products and then Origence Lending services, but even today the market still isn't fully aware of all we can do,” said Hamilton, who spoke with CUToday.info during CUNA’s GAC. “At Origence, we can underwrite and process under any system. We process loans right now under eight different systems. That is a big message we’re trying to get the market to understand. The other message is that even with all of the offerings we have, sometimes credit unions think we just do indirect loan processing. But we also do direct loans, processing, underwriting, quality control—so, literally a credit union could use us to supplant their lending shop if they wanted to.”
Origence is the umbrella rebranding over CU Direct. Hamilton said a big part of the challenge is that the CUDL brand is so well-known, reinforcing the perception the company only does indirect lending.
Addressing Another Myth
Another myth he said the company is working to correct is when credit unions see the cost of outsourcing to Origence, sometimes they decide to instead just hire temp workers and more processors themselves to save money.
“It’s not just a matter of hiring a loan processor for X and that loan processor can do three loans per hour,” explained Hamilton. “It’s all of the other stuff that goes along with carrying staff and employees. Who’s going to manage them? What about benefits? What about the overhead expense? Are you considering all that? And, most importantly, what’s going to happen when you lose that team member or employee? You are starting all over. We have 275 team members serving 150 different credit unions. We have the same staffing challenges as everyone else, but we are doing this at scale. We have multiple redundancies, so we never get severely impacted on capacity now if a team member or two leaves.”
Hamilton said Origence Lending Services has approximately 150 clients, and of those about 40 have outsourced almost their entire lending operations.
Other Lines of Business
As CUToday.info has reported, 2022 was a very good year to be in the auto lending business, and that includes Origence’s/CU Direct’s record volumes. But what has it been seeing in its other lines of business?
“Looking at 2022, in addition to auto we saw a strong surge in RV lending, which I wouldn’t really encourage a credit union to dip their toe in. I would say either commit to it and have a competitive program, or not,” Hamilton said. “The auto refi business through broker origination for new members really surged and I think a lot of credit unions, if they work with a reputable refi broker, are having success there. One thing we offer there in sitting between the two is quality control. If you work with a refi broker they do all the processing, but the credit union still has to review everything. We offer a service where we are in the middle and, literally, the credit union just has to hit the fund button and we do the quality assurance.”
Leasing Remains Strong
Hamilton said volume has also been strong in leasing, which he said is “not going to go away” as car prices and interest rates remain high. Origence has entered into a partnership with Credit Union Leasing of America, which sets up the dealer relationships when it comes to leasing, and with Centennial Lending, which handles the processing. All of that passes through CUDL’s pipes.
“So, a credit union can literally launch leasing without having to have any in-house expertise,” Hamilton said.
He added that even with all of those parties involved, the loans are profitable to the credit union because they save considerable overhead expense related to employees.
Looking Ahead
Looking ahead to 2023 Hamilton said Origence Lending Services also expects to see growth in retail merchant financing, not for small ticket items, but for larger purchases such as solar power systems, home improvements, etc.
“The beautiful thing about that product line is the competition, such as Synchrony Financial, their interest rates are ridiculous,” said Hamilton. “So, credit unions can charge a higher rate than they normally would, in the teens, and still be supercompetitive, help the members and have really good margins. But, again, it requires having expertise, which is why we set up the partnership with LoanStar Technologies.”
FIConnect Rolls Out
Origence also continues to introduce and rollout its finance company subsidiary called FIConnect.
“The purpose of FIConnect is not to steal business from credit unions but to bring credit unions more business,” Hamilton told CUToday.info.
As an example, he pointed to electric vehicle manufacturers, which offer direct-to-consumer sales models and which don’t want to deal with a thousand-plus lenders.
“So, FIConnect is the top of funnel between the EV (manufacturer) and our credit union network. We can do processing and funding and everything so the EV company has a single experience they work with,” he said. “And we will immediately sell that loan and ‘memberize’ the borrower for the credit union. Then the credit union can service it. That will open up a ton of opportunity. EV financing is just one example of opportunities where a credit union struggles to capture loans at top of funnel.”
He said it also is offering a vehicle title tracking offering, which “doesn’t sound sexy, but anybody who does lending knows that is a real pain. It’s an administrative nightmare and requires a lot of manual effort, so we can again, offer that at scale and the credit union can focus on taking care of members.”
Growing in New Ways
As credit unions look to Origence, Hamilton said he wants them to understand the CUSO exists to help CUs get into new markets and to “de-risk” the venture.
“If they are wildly successful and overwhelmed by volume, they have reputation risk,” he observed. “Or, if they staff up in anticipation of that volume but they don’t get that volume, there’s risk. So, we’re here to grow their business in new ways.”
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