Consumer Portfolio Services is focusing on document automation to improve efficiency and prevent fraud.
Machine learning, artificial intelligence and e-contracting strides during the past 12 to 18 months are allowing Consumer Portfolio Services (CPS) to save time reading about 26 document pages per contract, Teri Robinson, executive vice president of sales and originations, said at Auto Finance Summit East 2024 in Nashville, Tenn.
“We started with automatically turning down deals, because that was the easiest automation to start,” she said. “Then you start doing the harder part — what are we going to approve automatically? The department built the score model. …. We shrank our credit department and now we’re 99% automated [on loan decisioning].”
CPS has made “leaps and bounds in the funding department” following improvements in automation, Robinson said.
Additionally, the upgrades have decreased the company’s turn time from nearly four days of underwriting per package to fewer than three, Robinson said.. Automation has also cut down on mistakes made due to human error, she said.
“When I started, we were pulling credit apps off the fax machine,” Robinson said. “You had to have this massive credit department because you couldn’t look at the income and the credit report; we were marking it up by pen.”
CPS’ outstanding portfolio grew 1.7% sequentially and 4.8% year over year, landing at $3 billion in the first quarter, according to the latest earnings release.
Justifying the investment
Financial limitations prevented the Irvine, Calif.-based financier from making the transition to digital automation and e-contracting sooner, Robinson said, noting that CPS is not backed by a hedge fund or large bank.
Automation is a “big financial investment initially, which is probably why we took so long to do it,” she said. “But you have to [invest in technology] these days.”
Investing in AI and machine learning allows employees to be more efficient, Robinson said.
“It’s consistent, it makes no errors and it protects your portfolio,” she said.
Portfolio protection, fraud
Tapping into technology has allowed CPS to expand its approach to fraud.. The company can review how many times a consumer has moved, how many jobs they’ve had, how many phone numbers they’ve had and more, which are huge indicators of fraud, Robinson said.
“It’s a few hundred thousand dollars to get going with [machine learning], but we’re going to save millions of dollars a year from fraud,” she said.
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