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SUCCESS STORY: CONSUMER LENDING
CLIENT:
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Major Finance Company |
DIVISION:
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Loan Origination, Collections, Corporate Services, Finance |
CONTACT:
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Executive Vice President
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MAJOR FUNCTIONS:
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Loan Origination - data entry and underwriting, Collections - including Bankruptcy and Recovery, Customer Service, Collateral Control, Insurance Finance, Accounting, Treasury |
SITUATION
The client, a $5 billion+ automobile finance company, initiated a
company-wide reengineering program aimed at helping their
management team achieve their service and profitability goals by
increasing revenue, decreasing operating expense and developing
an infrastructure to support growth in a cost effective manner.
With the help of this rationalization effort, the indirect
automobile financing business would be substantially reorganized
along functional lines to better support management's business
objectives. Also, remaining decentralized servicing/operations
functions would be regionalized and/or nationalized.
The key elements of the program included:
- Rationalizing all processes in Collections, Buying, Loan
Processing, Customer Service, Payments and Collateral Control to
improve quality, productivity and cost effectiveness, and to
establish a firm base from which to grow the business.
- Evaluation of consolidation strategies for Collections,
Buying and Loan Processing, recommending the most appropriate to
the organization in support of future growth.
- Developing functional specifications for the redesigned Loan
Processing function and identifying "gaps" with the loan system
automation.
- Rationalization of the payments process to improve payment
cycle times including an analysis of the current third party
"Lockbox" costs and performance indicators.
- Developing a Management Process to insure the monitoring of
productivity, service measures and benefits.
LOBUE RECOMMENDATIONS
Corporate:
- Establish an Administrative Services group to manage
activities relating to Facilities, Purchasing, Mail Services and
Reception.
- Create a new Loan Servicing department that is responsible
for handling all loans after they are booked.
- Create Quality Assurance function.
- Eliminate payment-processing functions from all field
offices.
- Enhance the VRU in Customer Service to handle more calls,
quote payoffs and eliminate handoffs.
- Standardize payments to clean up the process and reduce
reconciliations.
- Consolidate the funding function within the Treasury
Department.
Originations
- Remove Application Processing from buying centers and
centralize in new center.
- Consolidate remarketing functions into the Remarketing
department.
- Consolidate title follow-up activity into Loan Servicing
Department.
- Consolidating Buying Center Back End collection activity
into 3 full service Regional Collection Centers.
- Initiate paper-less buying utilizing the loan originations
system.
- Standardize Loan, Buyer and collection processes across the
organization.
- Create new Buying Center organization focused on sales and
originations activities.
- Focus DDRs on Top Dealers and redefine relationship loading.
Collections:
- Migrate all collections into 3 regional centers allowing for
account randomization and maxim facility usage.
- Establish consistent collection organizations, strategies
and production goals.
- Consolidate all Buying Center Back End collection activity
into 3 full service Regional Collection Centers.
- Create a Collection Support unit to provide clerical support
for all units within the center.
- Eliminate all paper forms from collection workstations,
utilizing instead the collection system.
REAL RESULTS
Total response time for credit decisions was improved by 30%. In
addition to the increased service quality related to
standardization and a more-responsive management process,
occupancy expenses were reduced by over $5,000,000 annually. The
program identified and achieved a reduction of over 400 permanent
FTE -- representing annual savings of $14,000,000.
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