International Bank: Improves Commercial Loan Operations Efficiency and Data Quality through Process Mapping and Standardization

Situation Analysis

This Top 40 international bank maintains a leadership position in the U.S. Mid-Size segment of the commercial lending market:

• Large…………………………………. $20M+
• Mid-Size…………………… $5M to $20M
• Small……………………… less than $5M

For the past three quarters, management was troubled by a growth slowdown across-the-board in commercial lending. Higher interest rates were easy to blame, but a closer look and informal comparisons indicated widespread, peer-lagging performance:  

• Under-standardized loan fulfillment processes
• Excessive adjudication cycle times
• Persistent employee turnover
• Stalled automation efforts

Inbound data-quality issues caused each loan package to be reworked an average of seven times between application and the point it was boarded. These excessive, avoidable errors throughout loan operations resulted in costly, time-consuming “checkers-checking-the-checker” to manually reconcile loan data. And inconsistent loan data quality was beginning to attract the attention of the bank’s examiners.

Management urgently sought comprehensive business process improvement and clearly defined key performance indicators (KPIs) to manage productivity.

A newly formed task force, led by the Executive Vice President of Commercial Loan Operations, selected The Lab to rapidly analyze the 2,400-employee U.S. commercial loan operations organization, deliver an improvement plan, and help implement near-term gains.

Phase I, Analysis: Processes & Data

The two-phased engagement started with business process mapping and deep-data analysis for end-to-end commercial loan operations process segments: from application intake through underwriting, closing and servicing.

To deliver a detailed improvement implementation plan in just eight weeks our process-centric consulting team began with The Lab’s standardized banking-process-analysis approach, best-practice IP-assets, and future-state process templates.

Findings Highlights: Process Mapping, Data Science/Analysis, and Customer Value Model

• Lack of Standardization — Multiple standards often existed for the same products, e.g., nine different application forms were in use for the same type of loan. Other products had none. And standards were not tracked or enforced.
• Poor Inbound Data Quality — More than two-thirds of loan packages were received with missing, inaccurate, or otherwise non-conforming data, causing credit analysts to spend up to 30% of their time on rework and re-contacting clients.
• Excessive Adjudication Cycle Times — Commercial loan underwriting times exceeded competitors by an average of at least 30%, ranking as a major customer irritant.
• Lack of Planning and Accountability — Management lacked effective capabilities to match resources to workload or to hold the appropriate staff accountable for results.

By the end of the eight-week Phase I effort, The Lab documented more than 250 non-technology improvements to standardize business processes and upgrade data quality. For technology-enabled improvement, forty-three valuable robotic process automation use-cases were identified. And more than two dozen opportunities to make better use of existing technology automation were prioritized. These improvements were organized into a six-month implementation work plan that also included a dozen Super KPI^TM dashboards to immediately manage performance and benefits.

Phase II, Implementation: Standardization, Analytics, Automation

The implementation plan was designed to first capture improvement gains from non-technology and “low technology” solutions to generate meaningful, near-term benefits that would fund the effort. During the six-month engagement, The Lab delivered four major types of Phase II benefits and long term assets:

1.  Process and Data Standardization – and Automation (Examples)

• Standardized, automated loan intake form – First, existing loan applications and related intake forms were evaluated, and all data fields documented. Using best practice templates, The Lab and client teams jointly created a future-state intake form and data-gathering process. The form was automated with the client’s existing Microsoft Power Apps license. First pass inbound data quality immediately improved by more than 40 percent.
• Downshifted admin tasks – High-cost loan reps previously spent more than 30 percent of their time performing one-off, administrative tasks (updates, reviews, data input, etc.). During Phase II implementation, more than three-quarters of these tasks were standardized, specialized and transferred to lower-cost, more efficient positions, contributing to 15 percent overall reduction in operating costs.

2.  Robotic Process Automation Bots

• Best-practice automation setup – On the client’s network, The Lab rapidly installed and configured Microsoft Power Automate to accelerate bot development while ensuring top-notch data security
• Commercial loan processing bots – Within a matter of weeks, The Lab scoped, built, tested, and deployed more than a dozen, standardized, high-value bots to automate “human glue” and “stare and compare” loan processing activities to improve data quality and reduce cycle times, e.g.,

Youtube videos of these solutions implemented can be seen by clicking the links below: 

Commercial Loan Onboarding Robotic Process Automation

Commercial and Consumer Loan Exception Robotic Process Automation

Commercial Loan Input and Loan Package Quality Control

3.  Super KPI Analytics and Business Measurements

• Executive-level Super KPIs – The executive team was “flying blind” with multiple, conflicting sources of performance data—they urgently needed one source of truth. The Lab rapidly cleaned and modeled the client’s data and applied our prefabricated, banking industry Super KPI models. KPIs were rapidly deployed to measure and manage:
  –  Individual-employee performance variance
  –  Loan underwriting cycle time, by product
  –  Loan servicing customer experience
  –  Desk level loan data quality
• “Drill-down” performance management dashboards – These Super KPIs nested from the executive level through mid-level management, all the way to the front line. Executive management could now manage the performance of individual team members. Dashboards were built on the bank’s network with existing Microsoft Power BI licenses, e.g.,

Youtube video of this KPI analytics solution implemented can be seen by clicking the link below: 

Banking Sales, Operations and Management Super KPIs in Microsoft Power BI

4.  Business Process “COE” and Related Assets to Sustain Results

• Business process “Center of Excellence” (COE) – Implemented to house all capacity models, Super KPI dashboards, and other Phase II assets to sustain and expand results
• Data-based capacity models – Quantified required staffing levels and available capacity in each line of business, enabling targets for attrition
• Standardized performance management routines – Implemented for each business area to achieve customer-service targets

Overall Results:
The Lab’s process improvement implementation program reduced inbound data errors by more than 40 percent and simultaneously reduced loan processing cycle times. The initiative generated approximately $2 million in recurring annual savings—a reduction of roughly 15 percent. Less rework, coupled with more automation, reduced the “drudge work” on staff and improved employee experience. The transformation effort was completed in six months, but positive ROI came even sooner—the project paid for itself in about four months.