- Case study
From weeks to days: streamlining commercial loan origination in financial services
Using Digital Twin analysis to identify bottlenecks and better ways of working
A multinational financial services corporation that offers a range of products to consumers and businesses, including merchant financing loans to commercial customers.
On average, the processing and approval of business loans took 13 days.
Challenge
This multinational financial services corporation offers merchant financing loans to existing commercial customers. Once a customer requests a loan, the loan progresses through several stages before being funded. These stages include document gathering, pre-underwriting, risk management, underwriting, contract generation, and maintenance.
When time is money, speed is a differentiator. On average, it takes approximately 13 days for business loans to progress from application to funding. The company wanted to identify where delays were happening, why, and ultimately create an action plan to reduce processing time to just two days. But the merchant finance process is global and complex. With three major teams working across multiple geographies and time zones, it was difficult to know where to start.
However, the company knew it needed to streamline the process to compete with other providers, such as fintechs, which can offer similar loans faster. In addition, it is passionate about customer experience, and wanted to give customers transparency throughout the process and reduce the time it took to notify them of the outcome of their application.
Solution
For the Genpact team, the first step was research. Even if you think you know where the problems in a process are, research often reveals challenges in places you might not think to look. Genpact's consulting team took the innovative approach of collating qualitative and quantitative data across the process, including the steps managed by third parties, to make recommendations on how to streamline loan applications from beginning to end.
To do this, Genpact visited client sites across the globe to observe and interview employees. We saw their challenges – such as a reliance on paper-based and manual processes – and uncovered insights that otherwise wouldn't have been captured with digital research.
Combining this research with digital data allowed the Genpact team to create Digital Twins. Digital Twins are digital copies or representations of a process followed by a user and/or technology to complete a given task. They offer a consolidated view of the end-to-end processes across multiple touch points and disparate systems. They also flag what is and isn't working to make it easier to identify opportunities for improvement and, potentially, automation.
The Genpact team also collected event logs – or time-stamp data – from the core loan-processing system, and used process mining to create the Digital Twin of the merchant finance process. Then, the team could identify wait times and bottlenecks across the process, quantify reworks and exceptions, and understand the factors influencing approval times. And, because a Digital Twin focuses on facts and figures, it removes emotion and bias from the research phase, which is a problem often seen in traditional interview-based approaches.
Impact
Using the Digital Twin of the merchant finance process, the Genpact team made recommendations spanning process changes, opportunities for automation, and ways to improve transparency.
We made five major recommendations:
The financial services firm is now turning these recommendations into action. It's focused on improving the customer experience and accelerating the time to fund from 13 to just 2 days.