A Brief Look At Trends In Automated Decisioning

Callahan & Associates surveyed 333 credit unions to learn about automated decisioning practices in the consumer lending portfolio. What did it find?

The credit union loan portfolio has expanded 45.8% in the past five years. To serve members more efficiently, credit unions are trying new strategies. Anecdotally, Callahan Associates has observed an uptick in the use of automated decisioning for the consumer loan portfolio. Additionally, Callahan clients have requested more information on the automated decisioning activities of other credit unions in this area of business.

To learn more, Callahan Associates survey 333 credit unions in the fall of 2016 to learn about automated decisioning practices in the consumer lending portfolio. The survey consisted of seven questions, and respondents range in asset size from $1 million to $15 billion.

Read on for insights from the survey. Then, dig deeper into different asset-based ranges using the interactive features below.

Insight 1: Does asset size affect whether a credit union has a consumer loan origination software?

Answer: Yes

Of the 333 respondents to the survey, 63.66% used automated decisioning; 36.34% did not.

When examining asset bands, there is a positive correlation between size of the credit union and Loan Origination System (LOS) usage. Approximately one-quarter, 26.67%, of credit union respondents with less than $100 million in assets use automated decisioning, compared with 94.74% of credit unions with more than $1 billion in assets.

There is also a loose correlation between asset size and the intent to implement an LOS. For example, 16% of respondents with less than $100 million in assets said they were planning to implement automated decisioning. For credit unions with $250-$500 million in assets, that number jumps to 41%.

The impersonal nature of an LOS was the leading reason for why a credit union does not use automated decisioning in its consumer loan portfolio.

Callahan Associates | www.creditunions.com

*Click on a peer group below and the graphs will adjust to display data for that asset band.

Don’t Stop Now

Interested in the full survey results? Contact us today about how to gain access.


Already a Callahan user? Click here to read the full results, including the answers to the questions below.

  • Does automated decisioning negatively affect consumer loan delinquency?
  • Are there correlations between automated decisioning and efficiency, consumer loan origination growth, the loan-to-share ratio, or average member relationship?
  • How often to credit unions evaluate their consumer decisioning criteria?
  • What percent of loans are auto approved or denied, compared with manually approved and denied?
  • Who has the biggest market share in the loan origination system market?



November 14, 2016

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