A More Proactive Approach to Indirect Lending: How Keystone Lending Alliance Can Help

Indirect lending programs generate a tremendous amount of data. The challenge isn't necessarily having access to information—it's knowing which measures provide the clearest picture of what is happening today and where the program may be headed tomorrow.

Traditional measures such as loan volume and delinquency remain important. But because they are largely trailing indicators, they often tell the story after a trend has already developed.

A more performance-focused approach combines these traditional measures with leading indicators that can help lending teams identify opportunities, understand emerging trends, and make informed adjustments along the way.

This is where Keystone Lending Alliance can be a valuable partner. By combining lending expertise, technology, analytics, and ongoing program support, KLA can help credit unions gain greater visibility into their indirect portfolios and make more informed decisions.

Here are some metrics worth keeping a close eye on.

1. Look to Book: Understanding Dealer Performance

Look to Book measures the percentage of approved applications that ultimately fund. While an overall look to book rate provides a useful snapshot, looking at the metric by dealer and borrower segment can provide additional insight.

For example, an overall look to book rate may appear healthy while individual dealerships are performing very differently. Understanding those differences can help determine where there may be opportunities to improve communication, pricing, dealer engagement, or the application process.

What to watch: A meaningful change in look to book at an individual dealership, while performance remains relatively consistent elsewhere.

How Keystone can help

Keystone Lending Alliance can help financial institutions take a more detailed look at dealer performance and identify trends that may not be apparent in aggregate reporting.

This additional visibility can gives our team an opportunity to have productive conversations with dealers, better understand what's happening at the point of sale, and make adjustments when appropriate.

2. Approval-to-Funding Cycle Time: Making the Process Easier

Speed continues to be an important consideration in indirect lending. Dealers have many financing options, and a streamlined process can make it easier for them to work with your institution.

Cycle time can also provide useful insight into the lending process itself. If the time between approval and funding gradually increases, it may be worth taking a closer look at stipulations, documentation, communication, or other workflow considerations.

What to watch: A sustained increase in the time between approval and funding.

How Keystone can help

Keystone can help identify opportunities to simplify and improve the indirect lending process.

By combining technology with lending expertise, Keystone works with credit unions to help reduce unnecessary friction and create a more efficient experience for dealers, borrowers, and lending teams.

The result can be a process that is both responsive to dealer expectations and aligned with your institution's lending objectives.

3. Indirect-to-Member Conversion: Creating More Value From Each Relationship

An indirect loan can be the beginning of a much broader relationship with a borrower.

For credit unions and other financial institutions, understanding how many indirect borrowers go on to become active members or customers can provide an important perspective on the overall value of the channel.

If funded volume is growing but member conversion remains relatively flat, there may be an opportunity to create more meaningful connections after the loan is booked.

What to watch: Changes in the percentage of indirect borrowers who establish additional relationships with your institution.

How Keystone can help

Keystone can help financial institutions think about indirect lending as more than a transaction.

With the right data and engagement strategy, institutions can identify appropriate opportunities to introduce new borrowers to the broader value of their organization. Timely communications, personalized offers, and thoughtful onboarding can help turn an auto loan into the foundation for a longer-term relationship.

4. 30-Day Early Delinquency: Gaining an Earlier View of Portfolio Performance

Delinquency remains one of the most important measures of portfolio health. Looking at early delinquency can provide additional insight into how loans are performing shortly after origination.

When viewed by dealer and borrower data, early delinquency trends may help identify areas that warrant additional attention or further analysis.

What to watch: A noticeable increase in early delinquency within a particular dealer relationship or borrower segment.

How Keystone can help

Keystone can help financial institutions monitor early performance and better understand emerging trends.

The objective isn't to react to every short-term fluctuation. Instead, it's to provide the information needed to distinguish normal variation from meaningful changes in portfolio performance.

When a consistent trend emerges, our team can then evaluate whether adjustments to underwriting, dealer strategy, loan structure, or other elements of the program may be appropriate.

 

Turning Data Into Better Decisions

These metrics can provide valuable insight—but the real benefit comes from how your team uses them.

A monthly report can tell you what happened. A more connected approach can help you understand what is happening, why it may be happening, and where there may be an opportunity to respond.

That's where a knowledgeable lending partner can add value.

Why Partner with Keystone Lending Alliance?

Managing an indirect lending program requires a balance of growth, member experience, operational efficiency, and sound risk management. It can be challenging to optimize all four at once.

Keystone Lending Alliance provides an opportunity to bring additional expertise and resources to that process.

Through a combination of technology, analytics, lending experience, and ongoing support, Keystone can help financial institutions:

• Gain greater visibility into dealer and portfolio performance.

• Identify trends earlier and investigate their underlying causes.

• Improve the efficiency of the approval-to-funding process.

• Strengthen dealer relationships through better communication and insight.

• Explore opportunities to deepen relationships with indirect borrowers.

• Support thoughtful, data-informed adjustments to lending strategies. *

A More Informed Path Forward

Indirect lending doesn't have to be managed solely by looking at what happened last month or last quarter.

By combining traditional portfolio measures with leading indicators, financial institutions can develop a more complete understanding of their programs and identify opportunities earlier.

And with the right partner, that process becomes easier.

Keystone Lending Alliance can help you move toward a more connected, informed approach to indirect lending—one that supports growth while keeping a thoughtful eye on performance, efficiency, member relationships, and risk.  

For more information, please visit www.keystonelendingalliance.com, or email Bob Brant, CEO, at rbrant@kla.us.com

We’re looking forward to discussing your future in indirect lending!

*Please note: Information not included in KLA’s standard reporting may require additional lead time to develop.