How One BPO Provider Achieved Faster Loan Processing Times & Improved Customer Satisfaction
Jaspreet Raina, general manager at FirstSource Solutions, joins PEX Network to discuss a project that the business process outsourcing provider carried out in order to reduce the time needed to process loan applications for a major UK bank, improving the end-to-end customer experience and boosting customer satisfaction scores in the process.
The project won the Process Excellence Network’s award for the best process improvement in services and transaction project for large corporations earlier this year.
PEX Network Could you give us some background to this project?
Jaspreet Raina One of our clients is one of the largest banking corporations based in the United Kingdom and we handle nearly 80% of their processes in our offices in Mumbai and Calcutta.
One of the biggest processes we handle for them is end-to-end processing of their mortgage business.
What we were doing is this an application comes in for a mortgage from the bank’s own branches. Once the application comes in, we look at the application, assess it, and decide whether it’s complete or whether there is further information required, such as a valuation on the property.
Once all of that is done, you take a credit decision. You send out an offer to the customer, telling him here is what we are giving you and if you are happy to take it, let us know, sign this and send it back. If the customer does that, you then print out a cheque that goes to the solicitor and the guy has his home.
We always made sure that everything got turned around within our targets in terms of both time and quality. But when we’d look at the customer feedback, we realised a lot of customers were saying "you guys took too long."
PEX Network Why did you decide to focus on this area?
Jaspreet Raina We knew that one of the goals of our client – the bank - was to improve customer NPS [Net Promoter Score]. So, we stepped back and said okay, we have all these pieces, and they don’t quite add up. They want to improve NPS, we’re doing a fabulous job of turning around what work comes to us according to our own measures, but the CSQs - the customer service questionnaires – don’t say that.
So we started going back and saying okay, something comes to me, I find a deficiency, I send it back, and then it just goes into this limbo, and one day it comes back and then I turn it around again.
Where does it go and why does it take so long?
That’s when we really started partnering with our client, and I think absolute, the credit I think here goes to the client to give us the support and the encouragement to really go to something that was not a part of our ISLO, this was over and above what we were doing for the client.
So we looked at the end to end process I sent something for evaluation, it should come back in three days, and it didn't.
That’s how it started the voice of the process was telling me - end to end- that I was not doing everything in 14 days, which is what the customer was promised. The voice of the end customer was telling us that they were unhappy, and our client’s balance scorecard was telling me I need to do something to get the revenues up.
We realised that valuations were a great delay – sometimes you call someone to verify income, and the income return doesn't look right. But originally we didn’t have the authority to make the necessary further inquiries. So we went back to the client and requested them to give us certain powers over things that we were not doing before and they were very kind to agree for us to do so.
Then we started with a standard Six Sigma approach. We got the team together, did a brainstorming, fishbone diagram and a Pareto, impact control…all of that.
From those exercises we figured out that there were a few areas where we went wrong
First, we were sending too much work back. It comes in, it’s not complete, and so it needs to go back. Why is that happening? Then we realised that was happening because sometimes there were very, very small – often seemingly insignificant - differences between the application and the system, and we didn't have authority to make those changes such as, for instance, making a J into a T.
So we went back and we got approvals to make those changes in our Bombay office.
The other thing we realised was income verifications used to take a lot of time. So we went back and requested to start sending requests for verification to the accountant and the employer earlier in the cycle and start chasing it almost immediately. We even set up a small eight member team who actually does call-outs to employers and accountants to try to ensure a 3-day turnaround.
The other significant area for improvement was in the valuation process.
To reduce errors and improve efficiency in the valuation process, the team came up with an automated tool to inform staff the kind of valuation that is necessary for a given loan case. The process is fully automated now and error-free.
PEX Network And it really sped up the process?
Jaspreet Raina Absolutely, no more errors, no loss of time or loss of money, because of incorrect valuations going out. The other piece was even if the valuation instructed was correct, it wasn’t coming back in time.
So we started looking at who was and wasn’t delivering on time and rated our providers.
This went back as data analysis to the business onshore and the head of the services and was used in performance meetings with the valuation providers. As a result of the performance measuring, we started to give more business to the "five star" valuation providers, which brought the entire turnaround time down for receiving those valuations into the system.
Finally, we realised that at the staff end here, sometimes there was just a human error. Somebody, somewhere in process, forgot about the case and it was just lying somewhere. To rectify this, we created case owners – someone who is responsible for an individual case, end-to-end, no matter what stage of the process it’s in. And to reinforce that sense of ownership we related case management directly related to an individual’s performance scorecard at the end of the month.
PEX Network What is the benefit of all this to your client (the bank)?
Jaspreet Raina Analysis shows if you send out an offer in less than 14 days, the customer’s propensity to take that loan is high. So by sending it out earlier, the target of the project was to take up this in-time offer from 69% to 80%.
Just this increment bought us maybe 200, 250 additional loans every month, and with an average loan size of £115,000 translates into about £6.9 million in increased revenue.
PEX Network Your client must have been happy with these results?
Jaspreet Raina Yes, and you are making their customers happy because many more are getting their loans on time - a huge thing for someone who is buying a house.
The challenge here really was that we identified something that wasn’t in our service level agreement (SLA) with our client but we wanted to do it because it make an important difference to them. That level of understanding and the kind of confidence that the bank placed in us – allowing us to make changes offshore and make phone calls to employers and accountants - was also testimony to the fact that they trusted us to do that work for them.
On the back of this, we have also been working on an NPS predictor model. The model is currently being validated but we’re hoping that it will be able to actually predict up front how happy the customer is going to be, and we make decisions based on that figure.
All of this has been a very significant project for us. From the team’s side, I think because all these ideas, innovations and tools came from team members, it’s been a huge motivator for people to not just do their regular assignments but also to be a part of what the client is doing onshore.