Quorum Federal Credit Union Streamlines Underwriting with DecisionRules

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

About QUORUM

Quorum Federal Credit Union (Quorum FCU), a trusted financial institution established in 1934, provides a variety of financial products, including high-yield savings accounts, mortgages, and personal loans. Serving employees of industry giants like Kraft Heinz, Mastercard, and Mondelēz. Quorum prioritizes convenient online and mobile banking for its nationwide members. In the competitive financial services landscape, Quorum FCU sought to improve efficiency and enhance their underwriting process for second mortgages and home equity lines of credit.

The Challenge

Before integrating DecisionRules, Quorum’s 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. Quorum needed a faster, more automated solution to improve decision-making.
• Scaling and Future Expansion: As Quorum 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. Quorum implemented DecisionRules to handle complex underwriting rules for second mortgages, drastically simplifying the process while improving decision speed and accuracy.

Key benefits of DecisionRules for Quorum included:

• Ease of Use: DecisionRules empowered Quorum’s 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.

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Brad Hack

Senior Engineering Manager, Quorum Federal Credit Union

„DecisionRules exceeded all expectations. It’s fast, intuitive, and has transformed our underwriting process. We’re excited to expand its use across other products.”

Automating the Underwriting Process with DecisionRules

Quorum’s 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. For example, Quorum does not offer second mortgages in certain states like Texas or Arizona, and these rules are automatically processed in seconds by DecisionRules.
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 Quorum’s underwriting criteria.
   • Custom Scoring: The underwriting process at Quorum involves evaluating over 45 different criteria. DecisionRules allowed Quorum 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
   Quorum 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, Quorum’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 at Quorum was rapid and straightforward. Within just a few hours, Quorum’s Senior Engineering Manager, Brad Hack, had developed a proof of concept using DecisionRules. 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: Quorum started with 10 underwriting criteria, quickly expanding to a more complex set of 45 rules.
2. Seamless Integration: DecisionRules was integrated with Quorum’s loan origination system and other business processes, including the ingestion of data from intelligent document processing platforms.
3. Business User Empowerment: DecisionRules enabled Quorum’s 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 Quorum’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, Quorum significantly reduced the manual effort involved in underwriting, freeing up valuable IT resources.
• Scalability: Quorum plans to extend DecisionRules’ usage to other products, such as checking and savings account decisions, as part of their long-term strategy.

Future Outlook

Quorum’s 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, Quorum is well-positioned to continue scaling its operations efficiently.

Conclusion

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