How USAA is investing in tech to speed the loan process

USAA is implementing new technology to speed the loan application and approval process as the lender projects flat auto origination growth in 2025 amid market competition. [caption id="attachment_58348109" align="alignleft" width="225"] Mark Pregmon[/caption] San Antonio-based USAA’s auto originations are expected to be flat to up 1% year over year in 2025, Mark Pregmon , vice president of consumer lending, told Auto Finance News . The lender’s retail auto loan portfolio ticked up 1.2% YoY to $18.6 billion as of March 31, 2024, according to a July 17 S&P Global presale report of USAA’s July 24 auto asset-backed securitization transaction. USAA was the 20th-largest auto lender by outstandings at yearend 2023 with a portfolio of $18.6 billion, according to the latest Big Wheels Rankings Data . Banks struggled to pick up market share in 2024 amid increased incentives from captives and affordability challenges exacerbated by high rates and rising insurance costs, Pregmon said. While vehicle sales have been strong , a large portion of that volume is tied to fleet sales, he added. USAA is a direct auto lender and does not offer commercial auto finance. “We maintained our share of the pie, but it was a much smaller pie for banks." -- Mark Pregmon, USAA “We maintained our share of the pie, but it was a much smaller pie for banks [in terms of] addressable market share,” Pregmon said. Credit access improves Many other lenders also tightened credit in 2024 to address potential recessionary conditions but have since opened their buy boxes, he said. In fact, credit access in December 2024 improved across all lender types, according to Cox Automotive data published Jan. 13. The Dealertrack Credit Availability Index rose 1.9% YoY and 0.9% month over month to 95.5, driven by increased approval rates, narrowed yield spreads and a decline in loans with negative equity. On a YoY basis, credit unions loosened standards the most while banks loosened the least, according to Cox Auto. Dealertrack Credit Availability Index

While growth has been slower, for the past two years USAA has been working to improve the loan origination experience for customers by speeding approvals and funding, Pregmon said. Auto Finance News spoke with Pregmon about USAA’s expectations for 2025 and the lender’s tech investment. What follows is an edited version of the conversation. Auto Finance News : What investments has USAA made to improve the auto loan application and funding process? Mark Pregmon : We’re working to make everything fast, easy and simple for our members to get a loan. As a direct lender, we must have attractive rates and a simple process. We adopted a better e-signature platform so members can complete applications more easily on their mobile phone. That rolled out in the fourth quarter and we saw better click-through, less time in the application and less members pausing to call our call center for help. We shaved about a minute off the closing time for members with that one enhancement. We migrated all our loan products — not just auto but also unsecured and other products — to our new loan origination platform. Over the last two years, we’ve been slowly migrating products over to ensure we get the experience right and build up volume over time. The new system is designed to go mobile. AFN : When will the migration to USAA’s new loan origination system be complete? MP : In a few months we will be completely off our old platform. The new one is on better technology. It’s more cyber-secure and it functions faster. We built the platform ourselves. We have insurance services, so you want the same look, experience and feel when you apply for insurance as you do for a car loan, a deposit account or a credit card. From application to fund time is much faster, and we’re containing that [USAA] member in digital. It ensures that the member doesn't go somewhere else because it's fast, easy and simple to use. Our look-to-book ratio is at 41% at the end of 2024, up from 35% when we started implementing the new system two years ago. AFN : What are your thoughts on the state of the auto finance market in 2025? MP : 2025 is going to be pretty much like 2024, maybe slightly better from an industry standpoint. The economy is generally healthy, unemployment is good, but inflation still persists and, while interest rates are down, house costs and car insurance costs are up. Affordability will keep some consumers on the sidelines this year. It’ll still be a tough year for banks. I’m keeping a watch on negative equity. That could keep consumers on the sideline from buying. We’ve heard from dealers that some consumers learn how much they are offered for their trade-in and walk away because there is not enough room to roll the negative equity into the new loan. With the fear of the recession gone, however, everything is starting to turn in the right direction as of the fourth quarter and coming into the first quarter. Auto Finance Summit East is set for May 12-14 at the JW Marriott Nashville featuring fireside chats with Santander Consumer USA and Chase Auto. Visit autofinance.live for more information. Click here to register for the event.

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How USAA is investing in tech to speed the loan process

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