Why has Judo Bank's business lending approval rate dropped by 15% over the past quarter?

Introduction

Judo Bank's 15% drop in business lending approval rate over the past quarter is a concerning trend that requires immediate attention. As we delve into this issue, we'll employ a systematic approach to identify, validate, and address the root cause while considering both short-term fixes and long-term strategic implications.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be seasonal factors at play. Has this 15% drop been compared to the same quarter last year?

Why it matters: Seasonal fluctuations could explain the change 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 improving off-season performance; if not, we'd look deeper into internal factors.

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

Why it matters: Regulatory changes could force stricter approval criteria, leading to lower approval rates. Expected answer: No major regulatory changes in the past quarter. Impact on approach: If regulatory, we'd need to adapt our processes; if not, we'd focus on internal factors.

• Thinking about our lending criteria, have we recently implemented any changes to our risk assessment models?

Why it matters: Changes in risk models could directly impact approval rates. Expected answer: Some minor tweaks were made, but nothing major. Impact on approach: If model changes are significant, we'd review and possibly revert them; if not, we'd look at other internal processes.

• Considering market dynamics, has there been a noticeable shift in the types of businesses applying for loans?

Why it matters: Changes in applicant profiles could affect approval rates if our criteria aren't aligned. Expected answer: There's been a slight increase in applications from higher-risk industries. Impact on approach: If applicant profiles have changed, we might need to adjust our criteria or target marketing efforts.