Academic journal article ABA Banking Journal

A Check for $5,000, in Ten Minutes

Academic journal article ABA Banking Journal

A Check for $5,000, in Ten Minutes

Article excerpt

"A lot of people look at it and say, 'Gee whiz! Here's a way to get free money,'" says Ray Davis, president and CEO of South Umpqua State Bank, Roseburg, Ore.

"It" is an automated loan machine, or ALM. Two and half months ago the $160million bank installed three of the machines made by Affinity Financial Group, and customers are just getting accustomed to the idea of receiving a consumer loan from a machine in less than ten minutes. "Some people are learning the hard way that you still have to have good credit history and you still have to pay it back."

The ALM uses touch-screen technology, similar to that of an automated teller machine, to guide the customer through questions traditionally found on hard-copy loan applications. The information is instantly verified through on-line checks with credit agencies and information services. A digital camera and an electronic signature pen record the customer's identity and signature, which are included on the loan forms issued by the ALM. If approved based on the terms specified by the bank, the customer walks away with a check, or a direct deposit is made into an approved account. If the user is denied, an adverse action letter is printed. The entire process occurs real-time, on-line in under ten minutes.

Inquiries vs. approvals. "The $64,000 question with these things," says Davis, "was: 'Where do we put them?' Since this is new technology we didn't know where to be quite frank." Eventually South Umpqua placed the ALMs in three high-traffic environments: a branch, a retail store, and a mall. Although it's still early in the game, the ALM located in the mall is receiving the highest rate of inquiries, while the ALMs in the branch and retail store issue the greatest amount of approvals. …

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