July 24, 2021

Ally ramps up automation on wave of consumer confidence

Ally Financial Inc., one of the largest U.S. auto lenders, is ramping up automated processes for auto and lease loan originations. The change signals a growing confidence in the company’s underwriting tools and the financial stability of its customer base amid the ongoing coronavirus pandemic.

Ally CFO Jenn LaClair said last week that the Detroit lender is revitalizing its automated decisioning program after scaling back some of those processes because of the economic uncertainty caused by the virus.

Automated decisioning, which is a banking system that processes an auto loan application without human intervention, determines creditworthiness and extends a loan offer or declines the application. The process is “faster and helps our dealers and their end consumers to make quick decisions,” LaClair said. “As we came through COVID, we took a pause simply because we wanted to do some extra due diligence in our underwriting process, in particular around employment.”

Automated decisioning saves time in the finance and insurance office, especially for customers with very high or very low FICO scores. Not all customer credit situations can be quickly determined, which is why auto lenders say a certain number of human underwriters are required.

Ally processed 12.1 million auto loan and lease applications in the fourth quarter, thanks to an uptick in auto decisioning and “advanced data analytics.”

“It’s our confidence in the performance of the business, the tools we have and ultimately the consumer as well,” LaClair said.

While economic uncertainties plague the auto lending environment, auto finance companies appear optimistic and willing to increase utilization of tools that result in faster decisions for auto loans and leases, particularly for consumers in higher credit tiers.