Why has the loan approval rate for Modalku's SME borrowers dropped by 15% over the past month?

Introduction

The recent 15% drop in loan approval rates for Modalku's SME borrowers is a critical issue that demands immediate attention. This decline could significantly impact the company's revenue, 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 loan approval process. Has there been any modification to our credit scoring model or approval criteria in the past month?

Why it matters: Changes in the approval process could directly impact approval rates. Expected answer: Yes, we updated our credit scoring model two weeks ago. Impact on approach: If confirmed, we'd focus on analyzing the new model's performance and potential unintended consequences.

• Considering potential market shifts, have we seen any significant changes in the types of SMEs applying for loans recently?

Why it matters: A shift in applicant demographics could explain the approval rate drop. Expected answer: We've noticed an increase in applications from newer businesses. Impact on approach: This would lead us to investigate if our current model adequately assesses newer businesses.

• I'm curious about our competitors' recent activities. Have any major competitors launched new SME loan products or changed their terms significantly?

Why it matters: Competitive pressure could be driving higher-quality applicants away. Expected answer: One competitor introduced a lower interest rate for established businesses. Impact on approach: We'd need to assess our product positioning and potentially adjust our offering.

• Thinking about external factors, has there been any recent economic news or policy changes that might affect SMEs in our target markets?

Why it matters: Economic conditions can significantly impact SME creditworthiness. Expected answer: There's been discussion of potential tax increases for small businesses. Impact on approach: We'd need to factor this into our risk assessment and potentially adjust our model.