The problem
Where the time was going
A mortgage lender founded in 1968, which has helped more than 80 million families into homeownership, found itself in an increasingly brutal market. Over five years competition intensified, margins grew razor thin, mergers and consolidations swept the industry, and some lenders were pushed out entirely.
Automated underwriting had made one-day approvals possible, a complete shift in an industry where 20-day approvals had been the norm. This particular lender, held back by bottlenecks, inefficiencies, and glitches that stretched loan cycle times to 45 to 60 days, was losing customers to competitors who could decide in a day, and needed a different way to run the business.
What we modeled
Mapping the process, then testing the fix
The lender's business consultant team took the view that one of the strongest survival strategies is simply to understand your own process flow, its bottlenecks, inefficiencies, glitches, and costs. Once the present process is understood, they held, most of the solution becomes evident, and a more efficient target process can be designed from there.
They chose process simulation to re-engineer the service business and, beyond their own operation, to help lenders nationwide do the same. The model laid out each lender's loan-production process, its tasks, resources, and costs, and supported real what-if comparison between the current and target processes, which also made a compelling case for change to skeptical management.
The result
The proof, and the payoff
The results were described as outstanding, with cycle times and costs both falling sharply. By making the cost of the current process visible and the target process concrete, the modeling built a business case strong enough to overcome organizational resistance and move senior management from the old way to the new.
Lenders working this way reduced cycle times, increased capacity, and eliminated inefficiencies, and the leading ones reached one-day loan approval. That one-day decision is the goal the work drives toward, against the 45-to-60-day starting point, rather than a fixed figure booked for this lender.
Part of our work in services.