Capital one Case Study

What needs to be done in the consumer loan processing organisation to meet the new business needs?

The new business need is to be able to increase loan applications which requires an increase in productivity and a shorter period of time of application process, as the longer loan processing time lead to an increase in the number of applications withdrawn. CapitalOne aims to have 700 application funded per month.

The company currently faces a shortage of workforce, yet the last thing it can afford to do is to hire more staff. Hence, we would like to suggest that the company reduces the loan processing time in order to retain its consumers. Capital One can modify its current allocation of its associates in order to provide a reduction in the time that is being spent on each application.

Rick, as the operation manager could improve his team’s performance by implementing the following 3 suggestions:

1. To reallocate and redesign the process and/or the roles of the underwriter associates

The bottleneck capacity is located in the underwriting process. From exhibit

3 we can learn that person 1 and 5 are always more productive than person 2 and 3 for every steps. Furthermore, the difference in the productivity is so distinct that we can suggest to implement division of labor. Rick can assign person 1 and 5 to concentrate only on these tasks: internet searches, credit evaluation and follow-up class. Meanwhile, person 2 and 3 should concentrate on the preliminary analysis, data entry and file preparation. This is because the performance of person 2 and 3 is so slow that it increased total minutes per application spent on this process.

By implementing this suggestion, we can assure that total activity spent in this process will decrease.

2.  To allocate one of the closers’ associate to help with the underwriter’s team.

Since closing is the last step of the whole process, associates in this field or closers will have nothing to do beforehand. In this case, we suggest that they utilize this ‘idle time’ to help underwriter’s associates in data entry and file preparation(packaging) as it doesn’t require special skills to do this. Thus, by implementing this suggestion, underwriter can shorten the interval between the current application and the new one by skipping the packaging steps.

3. Provide training to interviewers.

Provided the fact that interviewers are the first to finish their tasks, training them for underwriter skills will not be inappropriate. The flexibility of an interviewer becoming an underwriter will help to hasten the process time per application.

Building up of applications inventory results in an increase in the customer waiting time. Exhibit 7 shows that the proportion of applications that are withdrawn in comparison to the number of applications grows as the wait time after an interview becomes longer. The difference between the proportion of applications that are being withdrawn from 0-2 days and 11-12 days is 0.119. By changing the current allocation of associates, this will enable a reduction in the wait time after an interview, reducing the chances of an applicant getting loans from other companies.