Western Funding Inc. looks to further improve the dealer funding process with clearer guidelines and the implementation of new technology solutions like e-contracting, the company’s new President Jim Murray told Auto Finance News.
Western Funding will adopt e-contracting by yearend, following parent Westlake Financial Service’s rollout of the e-signature solution into all 50 states last October.
“At every place where we have a touchpoint with our dealers, we are looking to use technology to make it easier to not only submit deals to us but to get the right information to us to enable a fast, efficient funding process,” Murray said. “I can see that e-contracting will help with that.”
Additionally, as part of an “immersion” experience — in which Murray observes the processes and systems of all the lender’s departments — he’s been able to determine that the company’s dealer-funding guidelines need to be updated.
“My view is that our projects will be aligned around making it easier for the dealers to use our program, and making funding faster and more efficient,” he said. “On the servicing side, our projects are making sure we are doing everything we can to maximize collections on the portfolio of consumer loans in which both we and the dealer share in the outcome.”
Murray joined Western Funding — a subprime lending subsidiary of Westlake Financial Services — in September 2017, succeeding former President Guerin Senter who left the role in June 2016. During Western Funding’s year-and-a-half search for its new president, several executives shared the duties of the role. As president, Murray oversees all aspects of Western Funding’s sales, servicing, and operations.
Murray takes the reins with a diverse background in specialty finance at captives, independent financial institutions, and startups. Most recently, Murray worked as chief financial and product officer at Credibly, a Detroit-based small business loan funding startup.
Las Vegas, Nev.-based Western Funding, the deep-subprime lending subsidiary of Westlake Financial Services, works with about 1,000 dealers.
AFN spoke with Murray about his new role, priorities at Western Funding, and technology initiatives. Following are edited excerpts from the interview:
AFN: How bullish is Western Funding on auto financing this year?
Jim Murray: I would say we are very bullish, in that we think we have a lot of room to grow significantly in 2018. I think it’s a big market, and we are a small player; as we get our foundation really solid, and we start executing well, we think there is room for quite a bit of growth this year.
AFN: What is the relationship between Westlake and Western Funding when it comes to adopting new technology?
JM: E-contracting was rolled out at Westlake at the beginning of 2017, and you learn a lot about the system and how it impacts the users when you [roll out slowly]. Invariably, you find kinks and work them out. Western Funding was focused on foundational stuff in 2017, and figured, ‘OK, as Westlake Financial Services rolls it out and the adoption increases — which it did — we will leverage that.’ There is a real symbiotic relationship between us and Westlake, to the extent that Westlake identifies technologies and integrations that can help them, they can model that, and then we can adopt that if it makes sense for us — and vice versa. Western Funding can try things out like a laboratory, and if it makes sense for Westlake’s program — which is higher in the credit spectrum than Western’s — then we can roll those things upstream.
AFN: What are the industry’s biggest challenges?
JM: The industry, in my experience, goes in cycles, and I feel like we are at the end of a cycle. Every cycle there is blowup, then a holding period, and then a bunch of private equity investors come in seeking high returns; that money sometimes gets deployed in an irresponsible manner, and then the loan performance causes liquidity problems for lenders. I feel like we should be around the end of that cycle, and it kind of alludes to delinquencies rising industry-wide — although delinquencies are not rising for us. Rising losses is indicative, to me, that we are approaching the end of a cycle. I think for the industry, there is a risk of some fallout if capital was deployed in ways other than in a risk-adjusted manner over the last five years.
AFN: How is Western Funding preparing for a potential “fallout” or end of the cycle?
JM: Given the nature of this business, and given this past cyclicality which should be indicative of the future, we should always be preparing. We should always be evolving our risk-adjustment methodology, our data capture, our predictive modeling, and anticipating improving our ability to understand the risk. … Our goal is to provide a service to the dealers to help them sell vehicles to more customers — who would otherwise walk off the lot — [and get customers] into a better vehicle. … The goal is to get customers into an installment loan that could ultimately improve their credit. I want the dealers to have repeat customers, but I don’t necessarily want Western Funding to have repeat end-customers. … We should be always focused on how do we assess the risk of the deals, how do we set them up so that all parties have opportunities for success. If we are doing things right along the way, we should be able to benefit if the cycle turns down, so we are focused on what are we doing every day to get better.