Could New Business Be Slipping Through Your Fingers?
Generating new loans involves reaching out and gathering loan applications, but could you also improve the number of funded loans within the applications you already receive? Consider the following example:
Analyzing data and looking at it from different perspectives can often reveal new and actionable information. Of the many observations you may make, consider the following:
- This credit union is funding less than 4 out of every 10 loans. While the number of funded applications is up, the percent of applications funded has decreased each year. Could the credit union be more effective? What would need to change to improve that ratio?
- Of the applications the credit union has approved, about 65% were funded in the most recent year (and the percentage has dropped year-over-year). Isn’t this a truly lost opportunity? A member wants a loan from the credit union, the credit union wants to do the loan, and yet the loan is never funded. Why?
Often, credit unions can gather this information about the current process quickly. Once prepared, analysis should first focus on data integrity. We have found that it can be important to be wary of approval and funding ratios that appear very high, and may often indicate steps in the process in which data is incomplete and not counting all applications.
Working with our clients, we have seen that a variety of opportunities may exist to improve the effectiveness of the loan process. The value comes in remaining curious about how the results might be improved, agreeing on desired results, and continuing to ask why the results aren’t at desired levels. The answers may lead to changes that serve your members better.
