LAS VEGAS — Harley-Davidson Financial Services implemented a new loan origination system after applying a type of business methodology called pace layering last year, Denise Brown, HDFS chief credit and risk officer, said last week during a panel discussion at AFSA’s Vehicle Finance Conference called “Technology: Navigating Innovation Trends ‘The How.’”
Pace layering is a methodology for categorizing, selecting, managing and governing applications to support business change, differentiation and innovation. Essentially, a business is split into three layers: systems of records, differentiation and innovation. Identifying the layers enables the business to innovate where it needs to while protecting its critical data and core processes. The methodology was created by Gartner, a research and advisory company.
“We made a decision to make a strategic investment into our origination platform,” Brown said. “And so one of the key components was to add artificial intelligence machine learning process capabilities. We took a clearly defined process and tool, and made it better.”
About 10 years ago, HDFS developed a dynamic structuring tool that utilized Microsoft Excel. It was a “clunky process,” and the captive updated the system for its underwriters and dealers, Brown said. “It’s no longer Excel but it’s populating instantly. It gives dealers a faster experience; we actually give them additional suggestions and answers. And so we increased the utilization and the consistency of the answers to our dealers, and we’ve improved the experience in terms of time efficiency.”
The specific contents of the HDFS pace layering strategy may differ from another finance company, Steven Silver, vice president at Pegasystems, said at the same panel. Utilizing the strategy allowed the lender to take a different approach and implement tech that it may have otherwise waited longer to do.
“[HDFS] can go to its IT business partners and say, ‘Guys, I know that we were looking at something like two years for this capability here, but let me show you how this is so strategically important and why it will change our business where we’re going to need to experiment,” Silver said. “Let’s build our enablement and our funding models all around this kind of different conversation.”
