Key takeaways
- • Slow credit decisions, not rates, were driving buyers to competitors.
- • Moving verification calls after the initial decision, and texting buyers directly, removed the biggest delays.
- • Response times improved by up to 98% across four countries within a year.
The challenge
With auto loan rates essentially a commodity, speed of credit decision had become the main differentiator. In Colombia and Venezuela, buyers could wait nearly 24 hours for an initial answer on dealer financing, plenty of time to shop elsewhere.
When revenues from the lender's Latin American auto finance operations went flat, dealers were clear: response time was the number one issue. The lender's Black Belts found that 40% of applications never moved past the initial stage, worth $110 million a year in lost revenue.
What we found
Led and coached by ProcessArc, the team mapped the loan lifecycle, analysed six months of operational data and collected the voice of the customer from dealers and buyers:
- Even when the lender decided quickly, 75% of buyers weren't told for five days or more, because busy dealer salespeople didn't pass decisions on
- About 35% of applications sat indefinitely in an "active" status, caused by inconsistent credit guidelines and an outsourced verification call centre that worked in hourly batches and stopped at 4 p.m.
- Operating hours didn't match dealers', luxury vehicles needed extra approvals, and there weren't enough credit analysts
Our approach
- Moved verification calls to after the initial credit decision and brought them in-house, cutting "active" applications by 40%
- Standardised credit guidelines and trained dealer staff to submit accurate applications
- Texted buyers directly when they were approved, since more than 90% listed a mobile number, taking the salesperson out of the loop
- Rebalanced staffing and extended hours to match dealers, with a control dashboard to sustain the gains
Results
- Credit decision time fell from 22 hours to 20 minutes in Colombia, and from 23 hours to 50 minutes in Venezuela, improvements of up to 98%
- Incoming applications rose by up to 120%, and purchased contracts by up to 75%
- Projected incremental revenue of $34.5 million in the following year
The dealers were so impressed that they asked for Six Sigma training themselves.
Sheila ShaffieCo-founderBusiness transformation leader who honed her skills at three GE businesses: Plastics, Healthcare and Capital. GE Master Black Belt, University of Chicago MBA and co-author of The McGraw-Hill 36-Hour Course: Lean Six Sigma.