Case memo: Loan Processing at Capital One
Capital One was founded on the vision Richard Fairbank and Nigel Morris had regarding the potential profitability that could be made from customizing credit card products based. “Capital One now is one of the largest issuers of master card and visa credits in the world.” Recently, due to a new marketing campaign, Capital One predicts an increase in demand for fund loan approval. Based on the current levels of capacity, the loan department will not be able to accomplish their targeted goal of 700 applications per month. Our proposed plan is aimed at accomplishing a higher level of utilization and capacity through modifications on the current loan approval process. Since the implied utilization of each step, which is now more than 1(see table 1), leads to the failure of attaining the final goal of 700 applications per month, our goal is to decrease the implied utilization for each procedure to less than 1, thereby achieving the final goal. Our improvements consist of four modifications as follows. 1) Redistribute tasks among associates
2) Installation of training program/Train the associates of the interview step to enhance the accuracy and completeness to decrease the minutes spent on follow-up calls for the underwriters 3) Control the inventory to reduce the customers wait time, therefore reducing the withdrawal rate 4) Invest in information technology
For this case, our group analyzed the current loan approval process to determine the improvements that could be implemented to increase overall utilization and level of capacity. Since some procedures within the process have more affect on the overall process, we’ve identified three steps that we believed are essential. We have found out three problems for the process of this company. First, the current interview process projects an acceptable implied utilization ratio of 0.86. However, through...
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