Report and Analysis. Loan Processing – Capital One. Coursework

Loan Processing – Capital One
Your Name
Subject and Section
Professor’s Name
September 29, 2019
Capital One is one of the biggest companies today in the world. As of 2018, it was reported that the company has over $372 billion in assets and employs more than 48 thousand employees around the world CITATION Smi191 \l 1033 (Smith, 2019). As provided in the case, Capital One’s new strategy (mail drop) aims to take advantage of their expected increase in the demand for fund loan approval after a span of six weeks. However, the current operations of the company show that it is only funding 350 loans per month, thereby making it difficult to achieve their targeted goals of 700 approved loans per month. Accordingly, the current operation’s capacity is equal to 98, 649 minutes whereas the implied utilization is 0.544. Nonetheless, an analysis of their program would show that by increasing the levels of utilization through different means, the target of 700 applications per month could be achieved. Specifically, the author of this article suggests that this could be done by (1) task redistribution and (2) implementation of training programs to increase efficiency, accuracy, and persuasiveness of associates.
Understanding the Loan Approval Process
There are generally five main steps in Capital One’s loan approval process, which are (1) Interview, (2) Underwriting, (3) Approval, (4) QA, and (5) Closing. Each of these steps usually requires the active intervention of an associate and the use of resources (i.e., phone calls). While the outline of these processes are designed in order to ensure security, there are still a lot of opportunity in order to increase efficiency.
By looking at the current interview process, for example, it shows that the current interview processes would only show an implied utilization ratio of 0.46. However, several problems could also arise such as the need for the associate to ‘gather information’. Aside from this, a cursory look at the data would show that the ‘recalling’ potential customers lead to an overall decrease as they leave on their own due to the long wait time.
Aside from this, it could be seen that the workflow from the initial interview to closing, faces a difficulty when it comes to the ‘underwriting’ process. During this time, the operations experience a bottleneck, which increases the time needed before the applicant can proceed to the next step. As it stands, the current process takes and average of 40.5 minutes on its own. As could be seen from the difference between inflow and outflow, the throughput is only .33, which suggests that further improvement is needed. To demonstrate this, the author of this article have identified two elemen...