Why has OfBusiness's working capital loan approval rate dropped by 15% in the last quarter?

Introduction

The recent 15% drop in OfBusiness's working capital loan approval rate 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 wondering if there have been any recent changes to our underwriting criteria. Have we implemented any new risk assessment models or policies in the last quarter?

Why it matters: Changes in underwriting could directly impact approval rates. Expected answer: Yes, we've tightened some criteria due to market conditions. Impact on approach: If confirmed, we'd focus on balancing risk management with approval rates.

• Considering potential market shifts, has there been a change in the quality of loan applications we're receiving? Are we seeing a different mix of businesses applying compared to previous quarters?

Why it matters: Changes in applicant quality could explain the drop without internal issues. Expected answer: There's been a slight increase in applications from higher-risk industries. Impact on approach: We'd need to segment our analysis by industry and risk profile.

• I'm curious about our operational capacity. Have there been any significant changes in our loan processing team's size or structure recently?

Why it matters: Operational issues could lead to slower processing and more rejections. Expected answer: No major changes, but we've had some turnover in senior underwriters. Impact on approach: We'd investigate the impact of team changes on approval consistency.

• Thinking about our tech stack, have we experienced any significant outages or performance issues with our loan approval systems in the last quarter?

Why it matters: Technical issues could artificially lower approval rates. Expected answer: There were a few minor glitches, but nothing major reported. Impact on approach: We'd still want to do a deep dive into system performance and error rates.