Why has Cross River Bank's small business loan origination volume dropped by 30% in the last quarter?

Introduction

Cross River Bank's 30% drop in small business loan origination volume over the last quarter is a significant issue that requires immediate attention. To address this problem, I'll employ a systematic approach to identify, validate, and resolve the root cause while considering both short-term and long-term implications for the bank's product strategy.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be seasonal factors at play. Has this 30% drop been compared to the same quarter last year?

Why it matters: Seasonal fluctuations could explain the decrease without indicating a deeper problem. Expected answer: Yes, it has been compared, and the drop is still significant. Impact on approach: If seasonal, we'd focus on year-over-year trends rather than quarter-over-quarter.

• Considering potential changes in the competitive landscape, have there been any new entrants or significant moves by competitors in the small business lending space recently?

Why it matters: External competitive pressures could be drawing customers away. Expected answer: No major changes in the competitive landscape. Impact on approach: If competition isn't the primary factor, we'd focus more on internal processes and product offerings.

• Thinking about recent regulatory changes, has there been any shift in lending policies or requirements that might affect small business loan eligibility?

Why it matters: Regulatory changes could impact the pool of eligible borrowers. Expected answer: No significant regulatory changes in the past quarter. Impact on approach: If regulations aren't the cause, we'd look more closely at internal factors and market conditions.

• Considering potential internal changes, have there been any modifications to the loan application process or underwriting criteria in the last quarter?

Why it matters: Internal changes could inadvertently be creating friction in the loan origination process. Expected answer: Some minor updates to the online application form were implemented. Impact on approach: If internal changes are confirmed, we'd prioritize analyzing their impact on the user journey and conversion rates.