Lending Process Improvement: New Processes, New Problems, New Solutions
Understanding a baseline for any process you are improving is critical for tracking changes, progress and, ultimately, the success of the endeavor. Further, tracking progress and understanding trends will help ensure a new process is “under control” and that any unintended consequences are recognized and addressed.
In this example, a credit union is improving its lending process with a new lending origination system (LOS) to improve turnaround and, ultimately, member satisfaction—helping to make and fund loans faster and easier. The baseline metrics have been analyzed to give decision makers and project stakeholders an understanding of the process before improvement—which in this case is average time to decision and fund loans:
Fast-forward four months later after the new process and LOS have been implemented. How has the new process affected the average times? Is the process working as expected? Let’s see:
You can observe that the time to decision has been cut roughly in half due to the more efficient process the credit union put into place. But notice the time to fund—it has actually increased. Of course, this begs the question “why?” With an overall objective of bringing the total time down, the credit union researches the increase and finds that the increased speed of approval has caused a slight backlog with funding. Armed with this information, the credit union takes further steps in staffing and funding processes to curtail the upward trend and reviews the progress after another few months have passed:
A striking improvement in each component of the process is realized—with the credit union able to book more loans more efficiently and helping to improve member satisfaction as well as the credit union’s bottom line. Consider, however, that this is not an ending process. Tracking these metrics on an ongoing basis will help ensure that the new process remains stable and continues to add value to the credit union.
