BOM North West Bank

Process Design Case Study: Northwest Constructive Bank
Submitted by :
Aditi Kakkar
Jinal Mehta
Erum Fatima
S Shyam
Gaurav Shukla
Ayush Srivastava
The New Mortgage Center 2
Andy Curtis, the Mortgage Operations Manager for North
West Constructive Bank (NWCB), had launched a major
investigation into his processes and how they might be
redesigned.
He had been prompted by the failure of his operation to
improve after it had consolidated three separate sites
into one location.
The staff from the three old centres that
covered the northern, southern and western areas of
the
banks customer base had been kept largely intact in
the
New site.
Andy and his team suspected that this may have
contributed to their failure to improve
performance, especially throughput time
performance, immediately after the move.
Andy has initiated an investigation that would
provide the basic data for a thorough examination
of how the mortgage centres processes could be
redesigned.
Theoretical Framework
Process Design
Design:
To design refers to the process of originating
and developing a plan for a product, service or
process.
Process:
Is any part of an organization which takes a set
of input resources which are then used to
transform something into outputs of products or
services.
The major objective of any process in the
business is to support businesss overall
objectives.
At a more detailed level process design defines
the way process flows through an operation.
Problem Recognition
Process Redesign
Staffing Level
Recycling
Probable Solutions :
Process Design:
Option 1 Keep the process as it is currently at the
new centre, with a common data input stage serving
all regions and with the three regions each having its
own underwriting, offer and completion stages working
in series. This arrangement had the advantage of
not disrupting the existing way of working and of
maintaining the organizational coherence of the three
teams which were each already developing their own
cultures.
Option 1
Data Input
Stage
Region Region
Region
1 3
2
Under
writing Under Under
stage writing writing
stage stage
Offer Offer
Stage Offer Stage
Stage
Completi
Comple
on Stage
tion Comple
Stage tion
Stage
Option 2 Reorganize the whole process by abandoning
the current regional structure and organizing four
sequential teams around each of the four stages of data
input, underwriting, offer and completion. This
arrangement was seen as being more appropriate for
the higher volume that the new combined centre was
processing. It would also allow some skills, such as
underwriting skills and legal skills, to be developed
because of the larger number of staff with these skills
working together. However, the team saw two
disadvantages of this arrangement. First, it would affect
the morale of the existing regionally based teams,
especially the southern team who had worked together
for many years. Second, for some activities in the offer
stage it was still an advantage to have some local
knowledge of the regional property markets. Even if this
option were adopted, the offer team would probably still
have to retain some local cells within the process.
Option
2 Data Data Data Data
Input Input Input Input
Stage Stage Stage Stage
Under Under Under Under

writing
writing writing writing
stage
stage stage stage
Offer Offer
Offer Offer
Stage stage
Stage Stage
Comple Comple
Compl Complet
tion tion
etion ion
Stage Stage
Stage Stage
Option 3 In some ways this was the most
radical design option being considered. It
involved reorganizing into four teams around
the four stages within the process, but
operating the underwriting stage and offer
stage in parallel. This was seen as risky,
especially with such high levels of recycled
applications, but offered the advantage of
short throughput times.
Option 3
Data Data Data Data
Input Input Input Input
Stage Stage Stage Stage
Unde
r Unde Offer
writi Offer r Stag Unde Off
Stag Unde writi e r er
ng Offer
e r writi sta
stag Stag ng ng
writin e stag ge
e stage
g e
stage
Completi
on Stage
Completio Completi Completi

n Stage on Stage on Stage
According to the Option 1 it he Data input stage is one and
the rest of the three stages are done region wise so that it will
enhance the coherence .and here in this option offer team still
should have some local cells that can further increase in time
and cost.
According to second option all the four processes will be done in
series and for each stage there are 4 different groups. This can
lead again to the same problem of time allocation and further
will add some time as the Local cells should also remain for the
offering cell which has good knowledge of the local collaterals.
Now the third method can be more efficient as the two stages
Underwriting and offer stages has the same time to process and
by using the real time updating the files the problem of
mismatch can be overcome.
We can also eliminate or say reduce the recycling applications
by making the initial process most important in whole process
and screen supposed recycling files detect at the data entry
level. For that they have to staff more trained people. That will
also increase the time from 16 to 20 minutes but at the same
time the overall process time could be saved by 35 minutes.
Staffing Level
The next issue being considered by the team
was how many people the bank should be
employing.
Solution :
By pooling all data entry into one stage , the
process saved 11 staff and there was a
general feeling that similar savings could be
made throughout the process if it were
redesigned according to option 2 or 3.
Recycling Problem
In the previous year
Total applications received -
76,250 Offers issued - 60,921
Total issued applications which
require recycling at least once
during their processing - 21,735
Reasons of Recycling
The majority of these were as a result of documents submitted
with the application or information in the application being
missing, incomplete, or inaccurate in some way.
Some recycling were the result of the customers changing
their mind about the details of the mortgage during the
processing period; usually this was because they required to
borrow a different amount.
Some recycling was caused directly by errors made within the
Mortgage centre during earlier stages of the process.
The largest single source of errors was those caused by
inaccurate or incomplete data capture when initial customer
and property information was taken
Even those errors attributed to customers were often the
result of their not being given appropriate guidance by staff at
the agents offices or at branches.
Difficulties with Recycling
Application sent to earlier stage would result in
longer time allocated to wasteful work
Resulted in continual churn of some
applications being recycled through the process
Represented wasted work
More serious than Rejected applications
To know the percentage of applications recycled
from each activity, we have no record of where
in the process they are recycled to.
How could Recycling be reduced?
1. Redefine the very first routing activity at the data
entry stage and make it an initial screening activity
that would try to screen out the applications that
were likely to be recycled later in the process.
2. Let through only those applications that were
unlikely to be recycled so initial routing activity the
most important in the whole process.
3. Keep staff for the activity who have a very wide
range of skills and allow them sufficient time to do
the initial screening, perhaps up to 20 minutes for
each application.
4. Use minimum of time on the recycling activity in
any of the stages of the process
1. Make the initial application filling process more
particular in details so that there is minimum
chance of trivial errors
2. Make stringent rules and norms regarding the
change of initial details given in the application
so that the details are not changed in every two
days or so. For eg: Give maximum time for
changing amount required
3. If an application requires too much of recycling,
then give it the last priority
4. Valuation of the Assets should be evaluated
more carefully with reliable sources
5. Make the staff, agents, offices and branches
more efficient in guiding the customers through
the process
We can see that the maximum no. of
Recycling cases occur in generally 3 activities:
1. Assess Credit case (Underwriting) 9.1%
2. Assess Property Valuation (Offer) 7.7%
3. Confirm with Customer & Agent 6.4%
. The minimum cases occur in :
1. Prepare Instruction docs (Underwriting)
1.3%
2. Complete finalization docs & files
(Completion) 0.9%
3. Release funds to legal rep. (Completion)
1.8%
The Bank can go for gradually eliminating
recycling in the activities where minimum
recycling takes place.
If it can be determined as to where the
recycling is sent to for correction, then such
activities should be more careful in
undertaking the initial work so that such
recycling can be reduced.
Benefits of reducing
Recycling
Reduction of errors help in making the details
much more easier to deal with
More time can be allocated to the actual work of
the activity
Less time required and will help in reducing time
taken by each activity to complete the work
Less wastage of efforts of the employees
Work done more efficiently
Total time for processing application will reduce
considerably
Thank You

BOM North West Bank

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Process Design Case Study: Northwest Constructive Bank

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