The Decision Maker

Is Your Loan Pipeline a Black Box?

Posted by Aaron Wang on Sep 9, 2011 8:51:57 AM

Credit union decision makers: do you ever feel like your loan origination application is a black box? Loan origination data goes in one end of the box. Then, something mysterious happens. Finally, out comes the result: a loan that is funded, declined or withdrawn.

This is an exaggerated scenario but it does symbolize the frustration many CU officials feel when it comes to managing the pipelines for both mortgage and consumer loans.

Basic information is usually available such as number of loans in process by type and by branch. However, more detailed information is needed in order to truly manage the pipeline for maximum efficiency.

Here are some common information “slices” decision makers would like to have as loans make their way through the pipeline:

At Application

Number of loans and proposed amount to be lent

  • By Type
  • By Term
  • By Interest Rate
  • By Employee
  • By Branch
  • By Role (Approved by, Funded by etc.)
  • By Credit Score 

At Funding

Number of loans and final amount lent

  • By Type
  • By Term
  • By Interest Rate
  • By Employee
  • By Branch
  • By Role
  • By Credit Score

At Withdrawal or Denial

Number of loans and proposed amount to be lent

  • By Type
  • By Term
  • By Interest Rate
  • By Employee
  • By Branch
  • By Role (Approved by, Funded by etc.)
  • By Credit Score
  • By Reason Code

As groups of in-process loans are highlighted, the decision maker would also like to be able to display the specific details for the individual loans that make up the group.

In the past, such information would take forever to compile. When finally available, it was usually out-of-date and no longer actionable. Another problem was integration with other data outside the loan application. For example, summarizing the data by branch by employee would require exporting the data to Excel and manipulating the data manually.

With state-of-the-art reporting and analytics technologies, however, up-to-date measures for managing the loan pipeline can be made available for quick and easy access.

As a loan moves through the various stages toward funding (or not), data from loan processing systems is copied to a separate database and configured in a report-friendly “architecture”. The resulting platform allows any number of popular reporting packages to access the data for more effective reporting. The architecture also allows integration of data from other CU systems to provide more in-depth analysis.

The improved reporting function delivers a two-fold benefit. First, it provides the decision maker with a more powerful tool to discover causes and effects in the underlying loan process. Second, once these relationships are known, the faster “feedback loop” allows the right action to be taken at the right time to improve the process.

Process improvement for your loan pipeline throws a welcome light into the black box and improves service to your members.

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Topics: Data Analytics