Posted by MeridianLink | May 6, 2020

How am I measuring the impact COVID 19 is having on my consumer loan origination business?

Schools are out for the year, millions of new jobless claims are filed each week, there are talks about “re-opening” the country, and I’m working out of my garage instead of the office; so the question is not if, but rather how is COVID impacting your members/customers and how does that impact your origination business?

The answer to “How is COVID 19 impacting my origination business?” can’t be as ambiguous as the question; not if we want to be able to act on the answer.  Our clients using MLX Insight (MLXI) can quickly get comprehensive, specific, and actionable answers to this question daily. The approach MLXI takes to addressing this issue, looks something like this:

  1. Expand the question; the answer is usually multi-faceted and requires a data driven story across several key business-driving metrics to answer it, not a single measure in isolation.
  2. Build a series of relevant benchmarks across weeks, months, days, years, branches, loans, deposits, people, etc.; impact is always relative, so we need to have a solid starting point.
  3. Actionable insights measured often; visualization analysis highlights lead indicators that drive action. Action drives results; “increase loan originations” is a result not an action. What gets measured, gets done. If something works, we want to be able to double down as soon as possible. If something’s not working, we need to be able to pivot quickly without over-investing.

That said whether its MLXI or another platform, these concepts work by offering a data-driven strategy aimed at being able to answer and act; MLXI makes executing on this super easy!

Expand the question:

“How is COVID 19 impacting my origination business?” This alone won’t give you an answer, but it will give you a chance at finding one that means something.

This question should be applied to the specifics of your origination business in order to (1) tell a more complete story evidenced in data, and (2) identify opportunities for action.

With MLXI it takes only a few clicks to cut through data so that we start asking more strategic and actionable questions. For example, knowing that funded vehicle volumes are up or down, does not give us something we can act on; knowing the variance is related to a change in approved to fund ratios, narrows the scope of our analysis, and gets us working toward something we can act on.


Above: We see a snapshot of March YrYr comparisons across several key metrics. This enables us to quickly identify the right questions to ask in order to achieve actionable answers. For example; application volumes are up +5%, approvals on those applications are up +28%, but funded volumes are only up +9%. This shows us that there is increased fall out in our approved to funded ratio (-15%). We would want to drill down here to diagnose the cause; again, this is easy with MLXI.


If risk mitigation is our goal, we’d also likely call out that most vehicle loans were issued against credit scores between 700 and 800, with a median rate of 4.04% and term of 60 months as shown in the loan level scatter.


Above: This is a distribution of individual funded loan records by rate and credit score (left) and by rate and term (right). With MLXI we could drill down on any of these individual records to see line level detail, or isolate records with more risk for monitoring. Comparing these views over time, we would be able to project changes in risk exposure on origination enabling a more top-of-funnel strategy.

Build a series of relevant benchmarks:

This is where we define impact; more dynamic benchmarking supports more dynamic action and strategy.

Benchmarking and indexing historical performance against current trends are one of the cleanest ways to demonstrate impact; impact is at the core of identifying the impact of Covid-19 on your business. Time series analytics is built in and easy to navigate in MLXI. Instead of having to wait, and report in April that Vehicle loan originations for March were up +5% over the prior year, with MLXI we might have called out weekly trends and been able to act sooner. Using MLXI, our clients have been able to see comparative performance across all levels of granularity and time. For example (expanding on our vehicle loan example), we might find the following insight:


Above: This is a weekly view of vehicle loan application volume. With MLXI, we could quickly filter this view by source, branch, loan officer, etc. to benchmark at the right level of granularity. This view allows us to see decline in weekly trends that would otherwise be covered up on a monthly basis. We see that in weeks 12 – 14 volume was down nearly -20% Yr/Yr; this insight would be lost if we only considered that March was up +5% Yr/Yr.

Being able to dynamically pivot our benchmarking would have shown us a downward trend in Vehicle loan origination starting in the middle of march. Having the data auto-refresh daily would mean that we don’t need to wait till be beginning of April to see March performance (consider how that delay would make acting a challenge?)

Benchmarks and indexes become relevant when they add substantial context and support strategic execution. We’ve seen a lot of this with COVID 19; benchmarking against the flu, benchmarking the time it took to spread between countries, and benchmarking the economy against the recession and depression.

Actionable insight measured often:

Many of our clients are launching specific “COVID” products during this time. Whether this is defined as a loan with a separate paper grade or a fee free deposit account, Clients using MLXI are measuring the success of these programs daily:


Above: This is what the launch of a new program looks like with MLXI. We can quickly see the status, source, funding, credit score distribution, etc. of new programs. Because the data updates automatically we can measure and adjust daily; were not waiting a month to see if what we did yesterday had an impact.


Above: Were drilling down to individual loan records to create exception reports for our loan officers, or data exports to other systems. All loan level data, including credit scores and audit logs, can be accessed, reviewed, and actioned against.

With this data clients can measure the success of the program in near real time, identify the branches most/least successful at promoting the program, cater the program to various member/customer classification, and adjust the program to be more effective.

The result, or the impact story evidenced by data, can then be simple, but specific. Below is what our fictitious client in this blog would have uncovered in their MLXI reports:

  1. We saw vehicle loans start to dip from their weekly YrYr trends in the second week of March by roughly 10%, when COVID 19 hit (because we benchmark weekly, and the data updates nightly)
    1. This continued through the month, led by our indirect channel (-20% in the following weeks), and we ended the month +5% over the prior year
  2. We also noticed a weekly decline in our Approval to Funded ratio of roughly -23% over prior weeks as members/customers did not complete deals that were in works.
    1. To address this, we implemented a virtual origination process last Thursday and, to-date, have booked 20 loans (10%) that were previously in processing
    2. This has impacted our processing times for the month, but if we normalize for this, we have continued to improve by 5% over the prior year.
  3. The decline in weekly YrYr application volume was mirrored across approval and funding volumes -10% – -15%)
    1. We have started a new “COVID” campaign offering extended vehicle loan refinances and are targeting (because generating a target list is easy in MLXI). Borrowers who took out vehicle loans in the past three years with credit scores (at the time) > 700.
    2. So far we have issued 9 loans, which decreased the impact of COVID last week on our Vehicle loan origination by roughly 5%. We continue to monitor this program daily.

It took me longer to write this blog than it takes our clients to get this insight!

As for the garage question; I have 3 kids under the age of two, and my wife works from home under normal conditions in our home office. The garage is all I have left.  I’m working on how MLXI can help me build a business case for taking my wife’s office.

If we keep saying that “COVID will change a lot of things going forward”, then we must be able to quantify, act on, and anticipate those changes in order to stay ahead and help our members/customers. I don’t know that anyone, including me, know the full impact of COVID; not yet. I do know that it has, and will continue, to impact originations, and that MLXI will help you act to mitigate that impact.

If you have LoansPQ Loan Origination System or are considering it, and want to learn more about MLX Insights (MLXI), our BI Services, and how Meridianlink can help make your bank or credit union consistently grow and improve, please schedule a demo with your partner success manager. If you don’t have one, please click here to schedule a demo.

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