Why has Lendable (London)'s personal loan approval rate dropped by 15% over the past month?

Introduction

Lendable's 15% drop in personal loan approval rates over the past month is a critical issue that demands immediate attention. This decline not only affects the company's revenue but also impacts customer satisfaction and market position. I'll approach this problem systematically, focusing on identifying the root cause, validating hypotheses, and developing both short-term and long-term solutions.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a recent change in our credit scoring model. Has there been any update to our risk assessment algorithms in the last 1-2 months?

Why it matters: Changes in credit scoring can directly impact approval rates. Expected answer: Yes, there was a recent update. Impact on approach: If confirmed, we'd focus on validating the new model's performance.

• Considering market conditions, I'm wondering if there's been a shift in the applicant pool. Have we seen any changes in the demographics or credit profiles of loan applicants recently?

Why it matters: Changes in applicant quality could explain the drop in approvals. Expected answer: Some shift in applicant profiles has been observed. Impact on approach: We'd analyze the new applicant segments and their approval rates.

• Given the significance of the drop, I'm curious about our competitors' performance. Do we have any intelligence on whether our competitors are experiencing similar declines in approval rates?

Why it matters: Industry-wide trends could indicate external factors at play. Expected answer: Limited information available, but no major industry-wide trends reported. Impact on approach: We'd focus more on internal factors if competitors aren't affected.

• Considering potential technical issues, I'm wondering about our application processing system. Have there been any reported glitches or downtime in our loan processing infrastructure?

Why it matters: Technical issues could lead to incorrect rejections or incomplete applications. Expected answer: No major issues reported, but some minor glitches occurred. Impact on approach: We'd investigate the impact of these glitches on approval rates.