Industry
Banking
Banking Services Transformation: Unlocking Exponential Value
Solution
Consulting
TCS Consulting Services to Achieve Success in the Digital Era
Highlights
- Complex credit policy and guidelines across multiple fragmented sources were making it difficult for a leading lender to meet market demands.
- TCS leveraged its strong mortgage domain capabilities to help the firm transform the process with an optimized business rule book.
- The solution is helping the firm achieve operational efficiency, while speeding up underwriting and improving loan quality and customer experience.
On this page
Overview
The client, a Fortune 500 financial services firm headquartered in the US, offers services such as checking and savings accounts, personal loan, home equity loan and credit cards. To support its objective of expediting loan approvals, the firm’s home equity division aimed to simplify the business rules to enable quick and accurate loan decisioning by underwriters.
Customer Challenges
With rising home prices in the US stimulating the home equity loan market, the firm saw a sharp rise in home equity loan applications.
However, the complex credit policy and guidelines present in multiple fragmented sources resulted in slower loan decisioning, and the lender was unable to scale volume to meet the growing market demand.
As a result, the firm was experiencing low underwriter productivity with high turnaround time. This translated to a high defect rate and low portfolio quality. In addition, the organization was facing challenges related to talent retention and lengthy hiring and training timelines. These together were driving up the underwriting cost, affecting both lenders’ profitability and customer satisfaction.
Key challenges faced by the firm:
- Lack of process standardization with no single repository of business rules
- Inability to decompose the business logic stored in disparate policy documents, job aid and guides, leading to inconsistent loan decisions and quality
- Complex process to arrive at final business rules, requiring accurate interpretation of existing business policies
- Presence of duplicate rules across different loan stages
- No benchmark for business rules available against other lenders/GSE standards
Our solution
TCS leveraged its strong mortgage domain capabilities and experience of partnering with leading lenders across the globe to help the client in their process transformation journey.
TCS reimagined the client’s existing business rules based on a standard rule onboarding and maintenance framework. It documented all the business rules in a common repository. As part of the one-time consulting effort, TCS team identified the gaps and inefficiencies in the rules and improvised to deliver optimized underwriting results. TCS also captured the rules in an easy-to-onboard model, which could be leveraged by the client to increase automation maturity in their technology applications.
Consultative study – TCS leveraged its proven consultative framework to assess the business and operational challenges. A team of senior underwriters, domain experts and technology architects conducted a consultative study to identify opportunities for improvement, standardization, optimization, and digitization.
Automation – With the goal to optimize cost, ensure operational efficiency and improve underwriter productivity by empowering them with real-time insights, TCS built a ready-to-automate rulebook.
Testing – The team created a structure for documenting rules including rule traceability for relevant policies and procedures. A data dictionary was created to automate the documented rules. Approved rules were tested against live loans to measure real-time underwriting results. Multiple calibration/testing exercises were performed to ensure accuracy of the rulebook.
TCS reviewed over 80 policies/procedure documents, created over 550 rules, optimized 350+ rules and calibrated 50 production loans with the new rules.
Benefits
The optimized rules will enable the firm to improve operational efficiency by reducing the time taken for underwriting and eliminating errors in the process.
The new optimized rule book, when integrated into the automation engine of the client’s applications, will result in faster underwriting, improved loan quality and enhanced customer experience. By implementing the TCS optimized business rule book, the client can achieve:
- Faster Loan Approvals – Executing simplified business rules with 30-40% reduction in manual efforts.
- Improved Productivity – Driving 40-50% increase in underwriter productivity.
- Better Quality Assurance – Enabling continuous improvement and modification of rules based on analysis of loan calibration results.
