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Executive Summary:

Capital One is a bank that offers a variety of financial services to consumers and
business. It was in 2004 when Capital One decided to increase its number of funded loans
to 700 per month from about 350. The marketing department hence decided for a new
campaign. In order to reach their goal, Capital One was aware that it needs to improve its
current loan process and possibly hire new staff members. When analyzing the all the
processes I came up with a few changes which consisted of shifting job responsibilities,
and moving staff to different departments. Based on my calculations, I did not find it
necessary to hire additional staff.

Analysis & Changes:

Interview and Underwriting Group Changes:

I want to point out that based on my calculations (Exhibit 1), that the underwriting
step is the bottleneck with the highest utilization rate of 204%. The underwriting group
consists of the highest paid associates (their job function is the most complex). This job
involves a total of six steps to process an application. Moreover, a total of about 66.6
applications get rejected in this process due to declined and withdrawn application at this
process. Most of the applications decline due to poor credit history. Some applications
were already flagged during the interview process for other criteria. Some customers
withdraw their applications because they had already received a loan at other institutions.

I decided to reduce the interview group by three employees, retrain the remaining
four so that they could take on the Preliminary Analysis and Internet Search
responsibilities from the underwriting group. Doing so will reduce the outflow of
applications by about 36.5% and therefore the workflow department will not waste
resources by working on already flagged applications. Although this process will reduce
the number of applications that will reach the Underwriting Group, I still moved one
employee to that team since this person can also help out this busy group and possibly in
the long run help reduce processing time on their end once routine comes into place.
Finally, I assumed since about 14.1 applications get withdrawn at the Underwriting
Process, if the underwriters have more time available for follow-up calls after about five
to six days (instead of 5 – 10 days), the possible amount of withdrawn applications is
about 7.98 compared to 14.1 (outflow at the interview stage times 12.6% of withdrawal
possibility, conservative assumption, Exhibit 2 & 3).

QA Group & Closing Group:

The QA Group received another employee to improve the processing time, the
utilization went down from 165% to 78.8%. Additionally, I moved the Call function from
the Closing Group. This was another necessary change because seven applications were
withdrawn at the closing step, mainly because it took too long for the team to call the
customers and they had already accepted loans from other institutions, the anticipation
here is by having the QA Group call the customers, seven applications will not be lost.

Another employee was added to help improve the Closing Group’s utilization,
which was 158% before any of the changes.

Conclusion

The shifts in both employees and several tasks to different departments will
improve Capital One’s loan process from its current state. I decided not to hire new
employees so that the company can not only save money on hiring employees but also on
training new employees which is more costly than employees already familiar with the
firm. Rebalancing different tasks cannot only help improve utilization and hence increase
the number of total applications processed and accepted, it can also improve employee
morale by adding more responsibilities to their daily tasks.

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