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Process Quality

One thing I found fascinating about the opportunity to work in a new industry is that while at first glance, the financial services industry was totally different from the communications industry I previously worked in, upon closer inspection, the two bore considerable similarities.

The similarities were in the way work flowed through the company from one group to the next. One group might adopt a practice that made their work easier but would cause problems further downstream. Each group was focused on their own internal issues unaware as to how that effected quality of the overall end-to-end process.

Loan File Quality

When I first started work, I was assigned to learn the internal processes by helping process loans. What I quickly realized was that considerable errors were resulting due to the practice by loan officers of using an existing loan file as a template for a new loan file.

The loan officers did this primarily for speed because the loan origination software contained a large number of forms and check boxes that had to be filled out as part of originating a loan. By using a pre-filled template, the loan officer felt they had a guide for filling out an application.

Unfortunately, what invariably resulted is that a momentary distraction, or text blindness would cause them to overlook items previously filled out which were incorrect for the current loan. This resulted in a whole host of problems downstream that the loan processing department had to deal with.

I raised this as an issue and was able to get a process change that banned use of a pre-existing loan template for a new loan.

Processing Quality

While learning the loan processing, I noticed the processors were focusing on lender requirements for the particular loan product they were processing. However, the processors were responsible for the final check of their own work. When business is slow, that might be ok but when I first arrived, work was booming.

In a hurry to get from one loan application to the next, the processors developed a certain text blindness which is understandable. Rather than slowing the work down to enable the processors to more carefully check their work, simply having them exchange files and check each others work proved to be a simple, effective solution.

The overall quality improved which enabled work to be done even faster due to the reduction in downstream issues. The faster throughput meant a higher loan volume could be supported and owing to performance incentives, the connection between effort and reward existed and everyone profited.

Most importantly is that loan documents are legally binding contracts. The greater accuracy of the loan documents reduced risk exposure for the company which really paid off several years later when attorneys for under-water borrowers began combing through loan documents looking for the slightest error as pretense for getting out from beneath the loan.

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