Reimagining Lending
Summary
This Alberta-Based Financial Institution underwent a Digital Transformation in 2017 which sought to bring the organization’s processes into the digital age. In 2018, I was tasked with reimagining the small business lending process and it’s internal web app. The goal of this project was to identify and implement a new platform which would improve both the employee and customer experience, and maintain accuracy, without exposing the organization to increased credit risk.
The final solution would cut the time-to-approval down nearly 90%, the required data-points down 70%, and the time-to-funding was reduced from nearly a week to under 24 hours. These efficiencies would free up a substantial amount of time allow employees to focus on providing quality financial solutions for their clients, and would provide faster access to funds to allow clients to begin to transact days earlier than previously able.
Timeline
2018 - 2019
Role
Senior Product Manager
Methodology
Agile - Scrum
Challenges
Exhaustive Data Collection:
Prior to the Lending Reimagined initiative, the Small Business Lending process was limited credit applications up to $250,000. This application required the collection of over 140 data points across a 10 step process, a manual adjudication process handled by a team of credit adjudicators, and a manual fulfillment process handled by the bank’s Credit Fulfillment team.
Time Consuming:
This process could often take Financial Advisors in the branch over an hour to complete the application in it’s entirety, and would frequently take up 5-7 days from the application to final fulfillment when a customer would receive access to their funds.
Platform Dependencies:
This project was limited by the existing infrastructure on which the new lending application needed to be designed and built. This organization is firmly rooted in SAP’s suite of applications, and the final solution would need to support this architecture if not be directly integrated into the system. In addition, any third-party API’s such as for credit scoring with Canada’s credit reporting agencies or for fulfillment with the bank’s credit provider, First Data, needed to be implemented without impacting the performance of the application or adding unnecessary time to the fulfillment process.
Solution
After gathering a set of preliminary requirements from in-branch focus groups and working with the credit and legal teams, we were able to identify a minimum number of data points required for the adjudication decision to be made. The new lending application user interface was built utilizing this simplified set of required fields, ultimately reducing the application to approximately 40 fields over a streamlined 5 step process. This drastic reduction in the number of fields was realized by eliminating the need for the collection of supporting financial documentation, and leveraging a streamlined set of automated adjudication rules, which enabled us to reduce the time spent completing the application from nearly 1 hour, down to 4-5 minutes.
To ensure that the company was not exposed to increased credit risk, a subsequent set of required data was identified which would be requested once the lender had received a credit approval. This process was where our lenders would be required to collect supporting documentation such as financial records and business licenses before enabling the fulfillment process. Assuming the customer had provided the lender with all their requisite supporting documents, this final step would take less than 15 minutes to complete using the new lending platform, and would cumulatively result in more than a 66% increase in overall efficiency.
The final step in reimagining the small business lending process was to improve the fulfillment process itself, and in doing so eliminate any remaining manual steps to provide customers with substantially faster access to funds. This was achieved by integrating with First Data directly and batch-processing the approved credit products in an overnight queue. Allowing customers to receive access to their new credit products the next business day.
Analysis
The Small Business Lending Reimagined project, referred to as “Auto-Adjudicated Lending” internally, was an opportunity to identify and alleviate team member pain points and increase the overall customer experience for the bank’s small business customers. By breaking the process into 2 stages-application and fulfillment-we were able to exponentially increase the efficiency with which lenders were able to receive a credit decision, and in doing so allowed them to spend more time focusing on the customer’s overall financial strategy - instead of merely their desired credit product. This efficiency increase would lead to an increase in overall customer satisfaction and retention, as well as improved employee satisfaction.
The Lending Reimagined initiatives all utilized the Scrum Methodology, and by doing so were able to iterate on the process as development was completed. Scrum is best suited for software development projects such as this, due to its rapid sprint cycles, and its evolving living backlog of requirements. Our teams used a consistent feedback loop with our end-users, through focus groups and in-branch prototype demonstrations, to ensure that the solution being developed was delivering a high level of value to our team members.
The Auto-Adjudicated Lending project illustrated a problem which faces many organizations across many industries: an over-reliance on manual processes or inefficient technologies to support their business. When looking at a process as a product owner, it is important to challenge the status quo, and ensure that the solution developed is as objective as possible. Had our project not began by identifying waste in the underlying process, we would likely not have realized as significant of an efficiency increase for our end-users.