Increasing a bank's productivity

Productivity is essential to create financial stability. Let's demonstrate the importance of productivity through a recent case study.

Increasing your productivity is a core focus of the service design and process improvement work that we do.

When better processes enable staff to complete tasks more efficiently, they feel more satisfied. And with more efficiently produced products and services comes a better user experience, ultimately reducing costs while bringing in more business.

Let’s illustrate this with a recent case study:

One of our clients, a medium-sized bank with a social focus, was facing some challenges:
• Lengthy loan processing times
• High operational costs
• Loss of potential customers due to extended waiting time

Three6 helped simplify the home lending process and increased productivity for the bank, resulting in 25% reduced loan processing times, 25% lower operational costs, and increased customer satisfaction.

How did we do it?

We followed a five-step process which helped us understand the problem and then co-design an impactful solution in partnership with the bank. We put special emphasis on implementing the designed solution to truly make it stick.

1. Discover

Our client was facing several challenges in its lending process, including inconsistent loan decisions, manual data entry and document management, limited visibility into loan applications and their status, and complex credit policies that were hard to understand and implement. These challenges were causing significant delays in the lending process, leading to decreased customer satisfaction and ultimately, loss of potential revenue.

2. Define

After going through a shaping period, where we analysed its lending process and identifying challenges, we set some goals: to streamline the lending process, reduce operational costs, and improve the quality and consistency of its lending decisions. The organisation’s goal was to increase its productivity and profitability while improving customer satisfaction.

3. Ideate

Three6 worked closely with key stakeholders to brainstorm several solutions to address its challenges. We identified three main issues:

• Complex credit policies: Our clients recognized that their complex credit policies were leading to confusion and delays in the loan processing time. The policy document had many points which were open for interpretation, leading to inconsistent customer experience depending on Assessors. The policies were very risk-averse compared to the industry and regulatory standards.

• Multiple handovers: We identified that multiple handovers were happening while processing a loan application before arriving at the decision. This was leading to rehandling, double effort, and queuing times. To remove this, we worked with the client to get a case management process application which covered the process from submission to decision.

• Inconsistent decisioning and experience: We discovered that the Loan Brokers were unhappy with the Bank’s inconsistent lending decisions. This was leading to delays and loss of potential revenue. We also realised that the Bank was putting the same scrutiny on applications with different risk profiles. So, we decided to use the Credit Decision Engine to simplify the process for applications with low-risk ratings.

4. Design

Three6 designed a comprehensive solution that involved three main strategies:

• Simplify credit policies: Three6 worked on implementing the credit policy changes, reducing the number of rules and requirements that Assessors needed to follow. This made it easier for Assessors to understand and implement the policies, resulting in fewer errors and faster loan processing times. It also reduced the extensive documentation requested from the customers and brought our client to industry standards.

• Implement case management: We implemented a case management system, which ensured that one Assessor will process the application from customer submission to decision. This removed to need for detailed case noting for handover between different teams. It also removed the wasted effort of multiple staff members understanding the application and reading the previous case notes. It also guaranteed a consistent experience for the customer as they had one point of contact from the Bank.

• Use automated credit decisioning: We worked with the client to categorise the loan applications into various risk ratings. We used the already-implemented credit decision engine outcomes to prioritise the low-risk applications and make the assessment process similar for them by reducing the administrative tasks and introducing case noting by exception. This helped us get a quicker turnaround on these applications and helped the bank process more loan applications with the same resources.

5. Deliver

Three6 delivered the solution by implementing these three strategies incrementally. We piloted the initiatives on smaller scales to understand the learnings, including changes to risk, supporting controls, and potential benefits. Post-pilot, we focussed on change management, as all the different initiatives we were implementing impacted the same teams. We drove the change in culture using pilot results and feedback from the Assessment Champions who worked on the pilots.

Results: The implementation of case management and automated credit decisioning resulted in several benefits for the home lending company, including:

• Reduced loan processing times: The company was able to process loans much faster, reducing loan processing times by over 25%. This allowed the company to serve more customers and increase its loan volume

• Lower operational costs: By automating several manual processes, the company was able to reduce its operational costs by over 25%

• Increased customer satisfaction: Faster loan processing times and more consistent lending decisions improved customer satisfaction and loyalty, which resulted in increased business for the company

Overall, productivity is essential for the long-term success and financial sustainability of your business. Our combination of service design and process improvement is how we achieve productivity, increasing staff and customer satisfaction along the way.

Looking to increase your own productivity? Reach out to us through the form below, or email us at hello@three6.com.au