Santa Rosa company pushes loans to your smartphone

Imagine standing on a new car lot, checking out that stylish ride you’ve long craved, when your smartphone beeps with a message from your bank.

Prompted by GPS technology, an automatic alert notes your location and reminds you that you’ve been pre-approved for an auto loan for up to $40,000, with the interest rate and monthly payments spelled out. When you scan in the dream car’s unique VIN code, the bank app even tells you the average price that other customers have paid for the same model in your area.

With a few taps, you agree to the terms and lock in the loan. Immediately you notice that a variety of other personalized pre-approved loan offers - for home equity loans, debt consolidation, tax payments and more - all have been adjusted downward to reflect your new level of indebtedness.

For those who aren’t all thumbs on a smartphone - and those who wonder how that could ever be a good thing - such a day may sound like science fiction. But a Santa Rosa financial tech company says it has developed the software needed to make such lending possible, and it recently announced a partnership that could bring its services to the attention of thousands of banks, credit unions and other financial institutions.

The company is CUneXus Solutions, and it is part of the revolution changing how consumers save and borrow money.

“The technology is there for us to do really incredible things,” said company co-founder and President Dave Buerger.

Asked about business rivals, he replied, “I think our competition is the old way of doing things.”

Banking is experiencing the sort of disruptive Internet practices that have come to media, consumer electronics and other industries. The digitally enabled today are quick to learn about the latest financial service, and they are ever seeking transactions free from hassles, or “friction” as the banking industry puts it.

“For the first time we have a thing where customer satisfaction is driving demand,” said Sankar Krishnan, author of “The Power of Mobile Banking: How to Profit from the Revolution in Retail Financial Services.”

Part of the impetus comes from a younger generation, the “digital natives” who don’t like waiting for answers and who have no intention of sitting in a bank lobby until a loan officer calls them over to a desk and examines their paper loan application.

“Even if you pay them to do it, they are not able to do it,” said Krishnan, who has been in the banking industry for more than 20 years. “They are not wired that way.”

Already banking is being transformed by online payments, mobile check deposits and person-to-person money transfers. Next up are phone-enabled, “digital wallet” systems like Apple Pay for iPhones.

And while mobile lending already exists, “it’s going to proliferate in the next year,” said Robin McKenzie, a senior vice president with Redwood Credit Union in Santa Rosa. The credit union, she said, already provides most mobile banking services and this month will offer a link to Apple Pay for its credit card customers.

While banks have long mailed pre-approved credit card and other loan offers to credit-worthy customers, the standard lending model still is predicated on the idea that a customer will come looking to borrow funds, said Bradley Leimer, a digital banking expert and advisor to CUneXus.

But CUneXus “kind of flipped this idea on its head,” said Leimer. Instead of waiting for the customer to act, the company has built a system where, via banking apps and other means, a series of customized loan offers can be “perpetually in front of you.”

Rather than being put off by such offers, consumers will find them useful as a concrete demonstration of what their credit score really means, Leimer said. The CUneXus software “can tell you exactly where you stand” in terms of the offered lending limits and interest rates for various loans.

To make all this happen, Buerger said, the company’s software helps banks use their own criteria to identify credit-worthy customers. Using existing data on spending and lifestyle habits, the banks then offer consumers the types of loans they are likely to use and also to set the eligible loan amounts and interest rates. Once a borrower accepts a loan anywhere, the software immediately adjusts the remaining loan offers.

In an example, Buerger showed a computer screen where an imaginary customer was offered loans to buy or refinance a car, pay taxes, draw down the equity in their home, or borrow money for personal uses. Each offer had a customized amount, interest rate, term length and monthly payment.

In the case of car loans, the software can send notifications to shoppers at just the right time because CUneXus has acquired the GPS locations of virtually every car dealership in the U.S., Buerger said. It then sends push notifications to the user’s smartphone based on their location, much as other apps do now for a variety of retail services. Further, the software includes the ability to scan a car’s vehicle identification number and get a “true market value” based on ZIP code data from Edmonds.

CUneXus has three partners - Buerger, Darin Chong and John Reich - and only three employees. Buerger and Chong both previously worked on pre-approved lending programs for Redwood Credit Union. (Both they and Redwood’s McKenzie note that the credit union doesn’t use their software.)

The company was founded in 2008, but “really emerged” in 2013, Buerger said. That year Redwood City-based Digital Insight agreed to place CUneXus software in its banking platform for financial institutions.

And last week CUneXus announced a second alliance with Harland Clarke, a San Antonio, Texas provider of payment solutions and other services to 8,500 banks, credit unions and other financial institutions.

The CUneXus software “provides us another cutting edge product to offer our clients,” Mike Fay, Harland Clarke’s president of marketing services, said in a statement.

The new software still typically relies on human interaction before money actually moves between banks and borrowers. In the example on the car lot, Buerger said, the loan has been approved but a bank representative typically would call the customer within a few minutes and help complete the process. Even so, he foresees the day when even that step will be removed as the technology progresses.

Leimer also predicts mobile lending will become ubiquitous, though not without upheaval to the banking industry. His 2013 article for American Banker on the disruption facing financial institutions was entitled “There Will Be Blood.”

Buerger said some larger banks likely are working on similar pre-approved lending software, but he doesn’t know of another company that now offers a comparable service. Even so, he said, he’s not naive enough to believe there won’t be competitors.

“Everyone,” he said, “knows that this is the way the world’s shifting.”

You can reach Staff Writer ?Robert Digitale at 521-5285 or ?robert.digitale@pressdemocrat.com. ?On Twitter @rdigit