Case Memo: Loan Processing at Capital One Essay

1031 Words Feb 25th, 2011 5 Pages
Case memo: Loan Processing at Capital One

Executive summary 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
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Furthermore, the need to recall certain customers increased the overall process duration. As a result, many potentially qualified customers are lost due to self-withdrawal. Second, we’ve concluded the underwriting process is the bottleneck of the entire operation. Currently, it takes an average of 40.5 minutes per application to be put through. By comparing the inflow and outflow numbers, the yield/throughput results to .33. Two factors contribute to the low yield rate. 1) As mentioned earlier, 14.6 of the 100 inputted applicants withdrew their applications due to the process duration. 2) Of the remaining applications, 52 of the 100 inputted applicants were rejected because they were not qualified. Lastly, looking into the quality assessment procedure, no additional work value is added to the application. However, accurate information is vital before the application is passed through. The two associates in this step create a supply constraint for the overall process. This is evident in that the implied utilization measures 1.08, meaning the two associates cannot complete all tasks. After identifying the problems of Capital One’s, our group has created several solutions to increase utilization and capacity to process 700 applications per month.

First, we reassign the last two duties of the underwriters to the workflow associates and the

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