SAN DIEGO–A company that began its life when the Ford Taurus was the number-one selling vehicle and a gallon of gas averaged $1.17 a gallon, and which went on to become a verb in credit unions, celebrated its 30th birthday here by looking both back at where it has come from as well as at how the market might look 30 years from now.
The reflections and the forecast were shared by Tony Boutelle, the CEO of what is now known as Origence, an organization he has led since its founding. His remarks came during the company’s CU Lending Tech Live 24 event.
Tony Boutelle speaking to Origence Lending Tech Live event.
Origence began its life in 1994 as Credit Union Direct Lending (CUDL) with backing from the California Credit Union League (where Boutelle was working) and The Golden 1 Credit Union in Sacramento, each of which put up $200,000 to fund the new initiative. From those two investors, the CUSO now has 120 credit union shareholders, more than 1,000 participating CUs, and expects to do more than $60 billion in lending this year.
But given how the market landscape is changing, it is also exploring how it can raise new capital and leverage the value of owning the lending delivery channel.
“We’re doing fine today but we really see we need to get bigger,” said Boutelle.
The Changes Since 1994
To illustrate the point around how the market has changed and evolved in ways few could have ever imagined, he noted that in 1994 there were approximately 12,000 credit unions with a total of $307 billion in assets. Today, the industry has more than $2.2 trillion in assets. In 1994, CU Direct employed one programmer. Today, it has 285 programmers and product people. In 1994, a Seattle start-up called Amazon.com launched. Today, Boutelle said Origence has had some discussions with the massive online retailer about its plans for selling cars.
During its life to date, Boutelle noted “CUDL” became more than just a brand, it “became a verb,” with the company eventually operating under the CU Direct brand and then as Origence (a name that stands for origination plus experience), which is the umbrella brand over CUDL, Origence Lending Services, and arc OS and arc DX.
The Goal
“Our goal is to create the ultimate origination experience,” Boutelle told the meeting, noting it now has relationships with 20,000 U.S. auto dealers, “We have a very simple business model. We get the large credit unions in the marketplace and the dealers come.”
But those dealers have increasingly consolidated the brands under their respective stores, with the major auto groups now controlling about 25% of the market, he said. That’s the reason Origence has created FI Connect, the finance company that Origence stood up in order to make loans in partnership with third parties that just want to deal with one company, not dozens or even thousands of individual credit unions.
It's part of the broader “top of funnel” strategy Boutelle has discussed in the past
In 2024, Boutelle said Origence expects to do about $62 billion in funded loans via 2.4 million consumer loans. Ninety-five percent of those will be indirect loans funded via the company’s SmartFund solution. As the graphic at right shows, it is underwriting many more used car loans than it has in the past.
The Road Ahead
Looking forward, Boutelle said, “One thing we do every year is we figure out how much to put back into our products. We could put tens of millions into each of these stacks.”
Instead, it will be investing $52 million into evolving indirect lending, positioning top of funnel, modernizing direct lending and Origence Lending Services, he said.
Other areas of focus include:
- Loan and document processing automation
- E-contracting. “We have worked on this very hard on this,” Boutelle said. The new e-contracting solution will be released before year end and will include credit applications and decisioning, contract creation, contract validation, signing ceremony and funding package/e-vaulting.
- Rehash/Deal Update
- Document processing and automation. Boutelle said loan processing times have been cut in half and led to a 25% lift in loan processor productivity.
When it comes to digital documents, Boutelle said approximately 95% of the company’s loans are processed through its SmartFUND, which has 609 lenders live on the system, as well as 13,000 dealers.
Evolving Car Sales and Finance Channels
According to Boutelle, Origence’s top of funnel strategy fits into three stacks:
- Online marketplaces/auto shopping channels
- Online direct to consumer used auto sales models
- Electric vehicles and OEM direct-to-consumer auto sales models
“There are tons of channels to deal with,” Boutelle said. “All these channels are going to start evolving and we need to be a part of that.” You are going to be managing more channels than ever before to make loans. We want your brand out there, but in that first 10 seconds it probably has to go through us to get these big players to work with us.”
Additional Updates Shared
Other updates provided by Boutelle and shared with the Lending Tech Live meeting include:
- FI Connect is now licensed in 47 states, with Tesla the first example of how the company’s solutions are being brought to market by providing one touchpoint
- Although relatively new, it has done 13,000 Tesla EV loans in the 36 states where it’s available, representing $550 million in loan volume. It has also done some loan subvention programs as part of that.
- It continues to update its arc OS/DX solutions. “This is an important product for us and for you. We are enhancing the new UI/UX and improving our decisioning,” he said. It is also using AI and to that end working with ZestAI, Experian and Scienaptic.
- When it comes to new account opening and lending software, Boutelle acknowledged the biggest issue is fraud. To address the challenge, it has partnered with five companies as part of integrated ID and fraud solutions.
- It continues to invest in Origence Lending Services. “This is back office processing where we can do some or all of your back office for you,” he said. The unit now employes 275 people and is offering longer hours and improved compliance, he stated.
The Next 30 Years
Given the meeting was a celebration of Origence’s/CU Direct’s 30th anniversary, Boutelle offered some predictions for where the market will be 30 years from now in 2054:
- There will be fewer than 2,000 CUs with $10 trillion in total assets
- 100% of cars will be sold online
- All new cars will be EVs will be level four and five autonomous