You have lending and credit processes that have worked well for years. Growth has been gradual so you have not noticed, nor been able to measure, the cracks that have appeared in the foundation of those processes. Now, you’ve started an integration effort for a bank that’s been acquired, or you’ve been tasked by the Board to increase loan volume by 50% over the next 18 months while maintaining your current cost structure. Both events give you pause. Will your existing processes scale in a seamless manner? Or, will they break down under the pressure of increased workload and cause significant delays in processing; creating disruption in customer service and increasing your risk exposure? And, to potentially make matters worse, do you have a handle on how you will measure any potential performance degradation? Staff performance, monitoring and management will no longer be as simple as it once was when the team was smaller. What do you do? Immediately hire more staff, right? Or possibly shift responsibilities so your higher-paid, client-facing staff is taking on more steps in the process since they know the clients and opportunities best? We’ve seen this happen, and it’s probably one of the most expensive paths you can choose. While these steps might seem to be the easiest way to respond, they are not your best course of action for the long term.

We believe that now is the time whether you are experiencing rapid growth, an efficiency crisis or are in a steady state to evaluate and tune your credit processes from the top down. Our experience tells us that starting with well-defined goals and performance objectives is key. Creating processes that identify well-understood milestones, potential chokepoints, risk factors and key pressure points can give you and your team a firm, predictable set of metrics from which to manage your lending and credit processes. This will create clarity, so you are able to effectively communicate the processes and metrics to both the management team for buy-in and support, and to the teams involved so they can execute against a well-defined set of performance objectives.

Once solid metrics are in place, you can then apply growth, contraction or other resource models with confidence to predict how the overall processes will perform; measuring your level of responsiveness to your clients and accurately predicting your costs and profitability.