Case Study: Credit Union Clients’ Journey with DecisionRules

‍Read the PDF: Visual Summary of Credit Union’s Automated Underwriting Transformation

About our Client

Our client provides a variety of financial products, including high-yield savings accounts, mortgages, and personal loans. Serving employees of industry giants. Its focus is on convenient online and mobile banking for its nationwide members. In the competitive financial services landscape, our client sought to improve efficiency and enhance their underwriting process for second mortgages and home equity lines of credit.

The Challenge

Before integrating DecisionRules, clients' underwriting process was partially automated but remained heavily dependent on hard-coded rules within their proprietary loan origination system. This approach posed several challenges:

• Complexity and IT Dependency: The system’s rules were difficult to manage and required specialized developers, limiting agility and flexibility of the firm. .
• Speed and Efficiency: The underwriting process, although functional, was slow, often requiring manual intervention. The Client needed a faster, more automated solution to improve decision-making.
• Scaling and Future Expansion: The Client  planned to expand its decision-making processes beyond mortgages, it sought a scalable, user-friendly solution to be leveraged across multiple applications.

The Solution

In their search for a solution, DecisionRules stood out due to its no-code/low-code capabilities, intuitive interface, and fast deployment. DecisionRules has been implemented to handle complex underwriting rules for second mortgages, drastically simplifying the process while improving decision speed and accuracy.

Key benefits of DecisionRules included:

• Ease of Use: DecisionRules empowered business teams to manage underwriting rules without needing developer intervention.
• Cost Efficiency: The platform’s low operational costs, compared to traditional rule engines like IBM’s ODM, made it a budget-friendly option.
• Scalability: DecisionRules could be seamlessly expanded to other financial products, ensuring flexibility for future needs.

Automating the Underwriting Process with DecisionRules

The primary use case involved automating the underwriting process for second mortgages and home equity lines of credit. This process is traditionally time-consuming and involves several layers of evaluation. With DecisionRules, the credit union was able to streamline and accelerate this multi-step operation.

Here’s how the process was transformed:

1. Initial Data Ingestion
   When a customer applies for a second mortgage or home equity line of credit, the loan origination system gathers essential details, such as the loan amount, property ownership, and other relevant financial data. Prior to DecisionRules, this information would be processed manually, leading to delays and inefficiencies.
2. Preliminary Rules Check
   DecisionRules was implemented to automate the initial suitability checks. This includes evaluating basic eligibility criteria like the loan amount range, the number of borrowers, and the state where the applicant resides.
3. Complex Rule Evaluation
   After passing the initial check, the application proceeds to a more complex underwriting phase. This involves pulling data from external sources such as credit reports, home valuations, and tax returns. All of these inputs are digitized and processed through DecisionRules to ensure that they meet the client's underwriting criteria.
   • Custom Scoring: The underwriting process involves evaluating over 40 different criteria. DecisionRules allowed  our client to automate this complex decision table, handling scenarios such as credit score thresholds, home value assessments, flood risk evaluations, and more.
   • Dynamic Adjustments: One of the significant advantages of DecisionRules is its ability to apply real-time adjustments. For instance, based on fluctuating property values or updated credit scores, the system recalculates and adjusts the final loan recommendations.

4. Real-Time Decisioning
   What once took several minutes now takes mere seconds. DecisionRules processes all relevant data points, such as the customer’s credit score, home valuation, and debt-to-income ratio, to render an immediate decision. The rules engine outputs whether the loan is approved, declined, or needs further manual review based on the preset conditions.
5. Auditability and Compliance
   Client also leveraged DecisionRules' audit features to maintain compliance and transparency. Every decision rendered by the system is logged, providing a clear trail of how each application was evaluated. This is especially important in the financial services industry, where audits and regulatory reviews are common.
6. BI Integration:
   With DecisionRules connected to Power BI, client’s teams were able to generate comprehensive reports to analyze loan decision patterns. This helped them track frequent denials or approvals, assess if their underwriting rules were too restrictive, and continuously optimize the decision-making process.

Implementation

The implementation process was rapid and straightforward.  The platform’s intuitive decision tables allowed the team to easily automate underwriting rules, with initial results demonstrating DecisionRules’ powerful capabilities.

The implementation steps included:

1. Proof of Concept Development: The project started with 10 underwriting criteria, quickly expanding to a more complex set of 45 rules.
2. Seamless Integration: DecisionRules was integrated with loan origination system and other business processes, including the ingestion of data from intelligent document processing platforms.
3. Business User Empowerment: DecisionRules enables business users to create, edit, and deploy rules without the need for extensive IT involvement, reducing their reliance on specialized developers.

Results and Impact

The introduction of DecisionRules revolutionized Client’s underwriting process:

• Speed: What once took several minutes now takes seconds. The system renders decisions almost instantly, impressing both technical and business teams with its efficiency.
• Efficiency: By automating complex rule evaluations, our client significantly reduced the manual effort involved in underwriting, freeing up valuable IT resources.
• Scalability: future plans include extending DecisionRules’ usage to other products, such as checking and savings account decisions, as part of their long-term strategy.

Future Outlook

The project success with DecisionRules in underwriting has paved the way for broader implementation across the organization. With plans to integrate DecisionRules into their deposit origination system and expand its use for other financial products, the Client is well-positioned to continue scaling its operations efficiently.

Conclusion

By leveraging DecisionRules, our client has transformed its underwriting process, achieving faster decision-making, improved operational efficiency, and reduced costs. The partnership with DecisionRules has empowered Client’s teams to manage complex rules independently, without reliance on IT, setting the stage for continued innovation and growth in the financial services sector.