Easy Money

Jeff Norris (WEMBA '94) has invented a machine that could make him millions, but like a frustrated model who seeks recognition for more than good looks, Norris wants to direct attention elsewhere. The device is the Automated Loan Machine (ALM), and it is the most visible component of what is being hailed as a banking revolution. Among other services, the ALM allows customers to apply for and receive loans, open checking accounts and apply for credit cards without any human contact. But the machine is just a tool for Norris' key invention, Decisys/RT^sm, which stands for Decision Support System Real Time. This omnibus system verifies applicants' identities, checks their credit histories and determines whether they qualify for a particular service. With Decisys/RT, a whole array of banking transactions can be conducted in the neighborhood grocery store, over the telephone or through a laptop computer. In the world of finance, it is the Great and Powerful Oz.

"We are a service-oriented technology company, not a technology company," Norris says of Affinity Technology Group, Inc., the Columbia, South Carolina-based company of which he is president and CEO. "We had to invent the machine in order to perform the service."

Norris came up with the idea for Decisys/RT while he was a student at Fuqua. While applying for a bank loan, Norris was impressed-or rather distressed-with the lack of technology used, and the amount of time involved, in the decision-making process. He saw an opportunity to utilize technology to reduce wait-time and administrative overhead. Norris theorized that a machine could verify an applicant's identity with a photo image and a signature card. And since personal credit history could be checked through various services such as Equifax, he surmised that the information accessed remotely could be used to score a person's credit-worthiness. Then, approved loan documents and even checks could be printed out on the spot.

Norris continued to formulate his ideas at Fuqua. Papers he submitted in his accounting and finance courses became part of his business plan for Affinity. The major hurdle, of course, was to get financed. Then at a Board of Visitors meeting, he met Fuqua Executive-in-Residence Bob Price. "I asked Bob to look at my business plan, and two days later, he called from Minneapolis and asked when I could come up," Norris recalls. "He introduced me to various people who together raised half a million dollars for my business."

Today, Affinity is worth some $258 million, has several hundred machines installed in 18 states and is making plans to expand overseas. Affinity leases its ALM machines to financial institutions and receives a fee for every transaction. The system processes loans based on the financial institution's parameters, as well as lines of credit, credit cards, joint applications, auto loans, secured loans against assets in the bank and equity loans. Transactions are typically completed in less than ten minutes, all without any human intervention. "It's done through a combination of statistical modeling, on-line information services and information from the consumer and the financial institution," Norris says. "And it's all done on-line in real time."

Asked about the practical limits on loan amounts that could be approved without human intervention, Norris smiles. "There's no theoretical limit," he says. "Everything can be modeled statistically. Personal relationships may be important to some people. On the other hand, our way is more private, convenient and immediate."

The ALM has come under some criticism in the press for encouraging people to take on more debt than necessary. But Norris has a ready answer. "Ease of use does not equate to permissiveness," he stresses. "Applicants qualify for a loan only if they can handle it financially. The loan rate is typically the same the financial institution charges for transactions done in its branches-and much lower than credit card rates."

Norris says his system is greatly appreciated by the financial institutions that have used it. "It eliminates all the headaches loan officers face in finding and filling out documents," he explains. "For any particular transaction, our machine will produce all the documents necessary to conform to relevant state and federal regulations." And, of course, it generates revenue.

"Automatic teller machines brought convenience to the customer largely at the expense of the banker," Norris says. "Our system brings convenience to the customer and major profits to the banker."