An interesting case study on how automation has caused improvements in service, profitability and coverage for a simple instrument such as Loans. Because Loans are such simple instruments, it naturally tends towards a scale or volume business (similar to that of credit cards, FX or even cash equities). So the bottom line here is that if you build a BIGGER and BETTER mousetrap, they will come. I quote:
“Automation can bring numerous benefits to the consumer lending process. These benefits encompass both the bank and the consumer and can contribute directly to the bottom line and the customer experience,“ says Jacob Jegher, coauthor of the report and senior analyst. “Winning banks will embrace automation and loan origination systems in order to make faster and more consistent decisions, lower costs, increase productivity, automate processes, reduce errors, and enhance customer service.”
“Bank systems are a quagmire of complexities and inefficiencies. Lending systems and the associated processes are certainly no exception. Banks need to invest in identifying inefficient processes to improve reaction time, customer service, and employee productivity,” says Bart Narter, coauthor of the report and senior analyst. “Even with the present volatility in the US lending market, opportunity still exists. Banks need to focus on installing systems that will be with them for the long term—systems that will allow banks to respond to market demand, customer requirements, and operational requirements.”
People need to think more about latency, about having open links (to other systems such as online loan price comparison sites), about exception management systems, to have margin matricies on a dynamic basis (think on a non-linear basis!), to have multiple cross subsidy aspects built in, to look at loan returns on a multi event basis (marriage, divorce, job movements, etc.), etc. etc. But good and interesting report.
Read and consider!
All this to be taken with a grain of piquant salt!!!