Case Study

Washington Federal Expects More For Their Customers and PNC Consumer Services Delivers

WHEN JOHN CLAYTON, VICE PRESIDENT CONSUMER LENDING, joined Washington Federal Savings Bank in October 2000, the institution was facing one of the most rapidly declining rate environments in its 100-plus year history—not a favorable environment for a lender whose loan portfolio was heavily weighted toward residential mortgages. "To reduce our mortgage exposure, we adopted a strategy of rapidly increasing our presence in the consumer loan arena," explained John. "But there was a problem. Consumer loans had not been a high focus and we had no infrastructure to build on."

To develop that infrastructure quickly, Washington Federal decided to partner with a world-class consumer loan processing provider. "PNC Consumer Services (PNCCS) quickly became the leading choice for us," explained John. "Unlike others, PNCCS offered end-to-end service. They could handle everything from taking the application to servicing the loan, from collecting payments to staying on top of servicing compliance requirements—while allowing us to continue to market under our own strong regional brand."

Soon, not only were Washington Federal's new consumer loan products and systems ready for launch, so were entirely new channels for supporting them. "PNC Consumer Services created an interactive web site that allowed customers to apply for a loan right from their PC. Plus, they offered our customers expanded 24 x 7 support through a call center that seamlessly leveraged our Washington Federal brand."

Thanks to efforts like these, the relationship has "remarkable data to share," according to John. "First, we eliminated backroom operations and technology investments—saving costs. On the revenue side of the ledger, we've seen increases in all measures—application activity, booked loans, and dollar volume." Indeed, loan volume is over three times higher than two years ago—not only meeting, but exceeding goals. Though Washington Federal has experienced rapid growth in its consumer loan portfolio, credit quality hasn't suffered. Charge-offs and losses are less than 0.2% per year.

These results were achieved solely from the improved processes brought to bear by PNCCS. "They stemmed from streamlined operations and excellent marketing support. For example, while previously only a branch manager could take applications, now, with an easier system to use and with state-of-the-art automation, all customer service representatives and even the head teller can do so. We've expanded the sales force without additional expense."

How does John Clayton feel today about Washington Federal's decision to turnkey its consumer lending? "There are always concerns when entering into any outsourcing relationship," says John. "But PNC Consumer Services has set the bar for service very high. They deliver for us every day at every level. Total responsiveness—that's how I'd describe their service."

Washington Federal's promise to customers is "Expect More." A similar philosophy drives PNC Consumer Services, John Clayton believes. "Our decision to work with PNCCS enabled Washington Federal to move our consumer lending service light years ahead in a short period of time. We were able to implement variable expense accounting for the peaks and valleys of our business, reassign employees to more critical jobs, move to risk-based pricing for greater profitability, become easier to do business with for our customers, and greatly expand loan volume while maintaining quality," concludes John. "I'd say you can expect more from PNC Consumer Services, too."