Why has Cross River's small business lending program seen a 30% drop in application volume over the past quarter?

Introduction

Cross River's small business lending program has experienced a 30% drop in application volume over the past quarter, raising concerns about the product's performance and market positioning. To address this issue, I'll employ a systematic approach to identify, validate, and address the root cause while considering both immediate and long-term implications for the business.

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 trends could explain the fluctuation and help us determine if this is a cyclical issue or a more serious 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 comparisons; if not, we'd dig deeper into recent changes.

• Considering potential changes in the lending landscape, have there been any recent regulatory updates affecting small business lending?

Why it matters: Regulatory changes could directly impact application volume and our ability to serve certain segments. Expected answer: No major regulatory changes in the past quarter. Impact on approach: If regulatory changes exist, we'd need to adapt our product; if not, we'll focus on internal and market factors.

• Thinking about our user base, has there been any shift in the types of businesses applying for loans?

Why it matters: Changes in applicant demographics could indicate market shifts or issues with our targeting. Expected answer: No significant changes in applicant demographics have been observed. Impact on approach: If demographics have shifted, we'd reassess our marketing and product fit; if not, we'll look at other factors.

• Considering our product offering, have we made any recent changes to our application process or lending criteria?

Why it matters: Internal changes could be creating friction or disqualifying potential applicants. Expected answer: Some minor updates were made to the online application form. Impact on approach: If changes were made, we'd scrutinize their impact; if not, we'd look at external factors and competitor actions.