RISK BASED SITE VISIT IMPROVEMENT PROCESS : Business Instalment Loan Unit

3. Guarantee Installment Loan
(GIL)
44.5% Bank
55.5% Malaysia Credit
Guarantee Corporation
Business Installment Loan
RM 100,000 – RM1.0million
RM 650,000 – RM 30million
(small businesses)
Business Installment Loan
(BIL)
100% Bank
 No collateral, property valuation report, security deposit required.
 Fast approval within 2 weeks
 Loan repayment 12 - 84 months
Bank Credit Department
1.0

4. Sales team
to submit
the case
 Application form
 Required
Documents
Credit
Analyst to
review
the case
PASS
FAIL
 Credit
requirement
 Debt serving
ration
Credit
Analyst
trigger
Site Visit
Site Visit officer
will receive
Site Visit
notification
through email by
Credit Analyst
 Site Visit will be carried out by Site
Visit Officer
 Report will be uploaded into the
system and printed out in hard
copy form for Credit Approvers to
make final approval
Business Installment Loan Process Flow
1.0

5. QUALITATIVE
Data Collection
QUANTITATIVE
Data Collection
• 2 credit analysts
• 2 credit approvers
• 2 site visit officers
To understand the overall
process and issues arising
• Head of Credit and Process Manager
To explore on the possibilities
of streamlining the risk based site visit
process to better fulfil both the credit
and client needs
• Site visit process
• Turnaround time (TAT)
To measure the current process
work load and performance levels to
identify if the specified process
standards were met
2.0

6. Unsatisfactory
Turnaround
Time
(TAT)
TAT Target = 2 days
42.9% reached 4 days
31.2% reached 2 days
25.9% within 2 days
Issues:
• Unable to obtain customer
appointment
• Lengthy document required
Lack of
communication
• Misinterpretation of process
and information between
Credit Analyst & Site Visit
Officer
• Second site visit has to be
conducted due to lack of
information and documents
Fraud
Detection
Identified
from the site
visit
High
Repeating
Number of
Site Visit
• Site Visit report rejected by Credit
Analyst due to incomplete information.
• Site Visit Officer unable to sight
business activity
• Trigger second & third site visit thus
increase TAT.
10 to 15 cases reported as fraud
Situation:
• Applicant sharing business premises
with other company (same industry)
• Applicant mock up the business
activity during the visitation
• Site visit officer unable to investigate
further due to time limitation
Too many
additional
documentation
after site visit
Programme Pending
• Loan approved based on
mandatory document
• Incomplete document
will affect the process.
• Credit analyst &
approver require more
document after the site
visit to fulfill the comfort
level in underwriting
3.0

7. Introducing an
Automated Risk
Profiling
Checklist using
Microsoft Excel
Site visit
conducted based
on Risk Profiling
Checklist
Collection of
additional
documents based
on Risk Level
4.0

8. Fraud Risk Control Fraud Cum Credit Risk Control
• Internal Blacklist
checking
• Business vintage
• Company’s operating
address
• Information of
Guarantors/Board of
Directors/ Key person
• Information of
company’s Auditor/
Secretary
• Issuance of key
person’s identity card
• Other Irregularities
noted
• Applicant company’s
CCRIS profile
• Key person & guarantor’s
credit card utilization
• Bank statement
transaction
• Key residential address
7
6
51
2
3
4
1
2
3
4
5.15.0
To trigger the customer’s risk level following two sections:
5.1

9. Profiling Criteria Parameter Ranking Rating
Check against
Internal blacklist
Applicant company is not dealing with any party listed
in the internal blacklist
a) Not dealing 3
b) Dealing 10
Business Vintage Business Vintage vs Key sponsor’s age a) Business Vintage > 5 years AND
b) Key sponsor’s age was between 30 to 50 at
the point the company was incorporated
3
Company’s
Operating
Address
Is there a recent change in operating address in the last
3 years
a) At existing operating address >2 years 3
b) At existing operating address < 1 year 10
Shareholder
board of director/
key person
a) Is there a recent change in direction in last year
b) Is there a recent change in key person in last 3
years
a) No change in both items 3
b) Change in (a) but no change in (b) 7
c) Both (a) and (b) changes 10
Company’s
Auditor/
Secretary
a) Is there a recent change in auditors/company
secretary in last 3 years
No change 3
Yes 10
Key Sponsor’
identity card
Issuance no > 3x Issuance no =< 2x 3
Is there other
irregularities
noted?
a) Inconsistent of key sponsor’s signature
b) Inconsistent of font size in documents submitted
c) E-SSM status reflected dormant
d) Error in Audited Report/Management report
e) Utility bill < RM200.00
No 3
Yes 10
Fraud Risk Control Profiling Checklist
5.0

10. Profiling Criteria Parameter Ranking Rating
Applicant
company’s CCRIS
profile
a) Bureau vintage >= 3 years based on loan obtained
b) Is there a property backed loan?
c) Is there a working capital loan?
d) Pending Application =<
a) Fulfill all 4 items 3
b) Fulfill atleast 2 items 7
c) Full fill less than 2 items 10
Key sponsor’s &
guarantor’s credit
card utilisation
(CCU)
Level of key sponsor’s & CCU a) CCU < 70% 3
b) CCU >= 70% to <85% 7
C) CCU >= 85% 10
Bank Statement
Transactions
a) Are credit/debit transaction inline with business
nature
b) Are there obvious knitting transaction
c) IS there any significant variance between bank
statement & financial report
a) Bank statement inline and no knitting
transaction and =< 20% variance
3
b)Bank statement inline and no knitting
transactions and >=20% to =<50% variance
7
C) Bank statement not inline 10
Key sponsor’s
residential
address
Type of key person’s residence match with profile a) There is a housing loan facility in CCRIS >=
RM 500k
3
b) There is a housing loan facility in CCRIS <=
RM 500k
7
c)No housing loan facility 10
Fraud cum Credit Risk Control Profiling Checklist
5.0

11. ≤ 55 56 - 70 ≥ 70
LOW
RISK
MEDIUM
RISK
HIGH
RISK
RISK LEVEL
5.0
5.2

12. Low Risk
(Score Cut off <= 55)
Medium Risk
(Score Cut off : 56 -70)
High Risk
(Score Cut off: > 70)
1. Not to sight any bank statements Not to sight any bank statements To sight latest 2 months bank
statements
2. No invoices is required for all types of
business including business without
stock
To collect 3 largest invoices each from
buyers & suppliers. Invoices are to be
selected by the credit & in the event
invoices are not available, SVO to
randomly choose 3 invoices each from
buyers & suppliers & match with bank
statement. In the event none of the
invoices are available, SV will be fail.
To collect 3 largest invoices each from
buyers & suppliers. Invoices are to be
selected by the credit & in the event
invoices are not available, SVO to
randomly choose 3 invoices each from
buyers & suppliers & match with bank
statement. In the event none of the
invoices are available, SV will be fail.
3. Not to sight any Tenancy Agreement,
SPA, Payment Voucher, Assessment Bil
Not to sight any Tenancy Agreement, SPA,
Payment Voucher, Assessment Bill
Not to sight any Tenancy Agreement,
SPA, Payment Voucher, Assessment Bill
5.3
5.0
• Only selected documents are proposed to collect during site visit based on risk level.
• Credit analysts and Credit Approvers are strictly advised to call and verify some
queries through phone verification if they still need further clarification from client.
• No additional documents to be collected during site visit and after site visit apart
from the required documents requested as per risk level.

13.  Site Visit based on Risk
Profiling level
 Collection of Document
based on Risk Level
 Automated Risk Profiling
Checklist (Microsoft Excel)
Improve
Customer
Satisfaction
Improve
Process
Efficiency
Reduce
operating
cost
Able to between credit analyst, credit approvers and site
visit officers
Site visit officers are able to from 60 minutes to 45 minutes for
Low Risk level – conduct the premise visitation accurately and without fraud
Credit Analysts and Credit Approvers to
fulfil their comfort level to underwrite the loans
Proposed process helps to to certain
premises which causes hassle to clients
5.0
LESSONS LEARNT:

14. 1
Credit
Analyst
2
Credit
Approver
4
Site
Visit Officer
Headed by
Senior Credit Approver
No Activity Resources Period Duration
(Weeks)
1 Credit team & site visit
gathering
Credit team & site visit
team
Week 1 1
2 Simple system development in
Excel
Credit & Site Visit & MIS
team
Week 2 1
3 User Training & Testing Credit & Site Visit Week 3 1
4 Post Production Monitoring Credit, Site Visit & MIS
Team
Week 4 to Week 6 3
TOTAL WEEKS 6 WEEKS
The feasible implementation period includes
one (1) month with additional of two (2)
weeks for post-implementation monitoring,
evaluation and review
6.0
6.1

15. Further discussion
• Standardize site visit risk profiling
checklist
• Criteria for automated risk profiling
checklist
• Physical documents to collect during
site visit based on risk level checklist
• Site Visit tracking in Microsoft Excel
• Standardize email trigger to site visit
officers
1
2
6.2
6.0
3
4
5
• Discuss and documenting risk based
site visit requirement for the
proposed changes
• Consider the conditions and
requirement to meet all the project
stakeholders’ expectations (ie.
possible conflicts arising among
stakeholders)

16. 6.3
6.0
6.4
6.5
 MIS team to develop the recommended process in Excel
 Cost Efficient
 Users are required to update the site visit file for tracking purposes
 Site visit officers will refer back to the risk profiling checklist to
prepare report upon site visit completion
 To ensure stability of process and system
 Allocate 3 weeks for monitoring and evaluation to
address any issues arising

17. Objectives of monitoring
Ensure all the activities are progressing
according to the timeline and goals
stated within the constraints
Facilitate and assist the progress
tracking through defining specific
indicators
Implement problem identification
system that can predict possible issues
arising and formulate responses – to
bring the people and processes back on
track.
1
2
3
7.0
10 – 15 minutes
Daily Reporting to
Project Champion
Credit
Analyst
Site Visit
Officer
 Regular updates are essential to
spot issues and take corrective
actions speedily to get back on
track
Project Manager should track the daily
progress, update, consolidate and
report the latest progress to the project
team and top management

18. RISK MANAGEMENT
 Reduce risks of what could go wrong and
are take preventive measures to avoid
unnecessary conflicts, disagreements or
mistakes
 Project team should escalate reoccurring
issues to higher management action
Common Risks
System (Microsoft Excel) down time or
error due to upgrade, bugs fixing or
unforeseen events
Absence or Unavailability of a Key
Resource
7.0

19. Explanation of the
improvement
process by Credit
Analysts, Credit
Approvers and Site
Visit Officers
10-15 minutes
short meeting
Collect, analyze &
review TAT
statistics
Stakeholder will be more
acceptable of the new
approach by elaborating the
improved process benefits
from their point of view
To find out on project team
and stakeholders concerns,
issues or feedback to the
improved process
Compare the previous and
improved process results to
assess how far the improved
process has assisted in meeting
the desired TAT and obtaining
satisfaction from clients
8.0

20. 9.0
High turnaround time
Collection of too many documents
High frequency of repeating visits
Lengthy visiting time
Improve turnaround time
Reduce misunderstandings
Reduce visiting time
Not needed to collect additional
documents
Reduce number of repeated visits

21. About Us (2015). Standard Chartered Bank Malaysia Berhad. Retrieved from
https://www.sc.com/my/about-us/
Business Instalment Loan (2015). Standard Chartered Bank Malaysia Berhad. Retrieved from
https://www.sc.com/my/sme/business-expansion-business-instalment-loan.html
Dietrich, D. and Hauch, A. (2014). Bank capital regulation, loan contracts and corporate
investment. Quarterly Review of Economics and Finance. 54, 230-241.
Divino, J. A. and Rocha, L. S. (2013). Probability of default in collateralized credit operations.
North American Journal of Economics and Finance. 25, 276-292.
Heizer, J. & Render, B. (2014). Operations Management: Sustainability and Supply Chain
Management, 11th ed. Pearson Education Limited: Essex.
Jeston, J. and Nelis, J. (2014). Business Process Management. 3rd ed.
Project Management Institute. (2013). A Guide to the Project Management Body of Knowledge
(PMBOK Guide), 5th ed.
10

22. Przanowski, K. (2014). Credit acceptance process strategy case studies – the power of Credit
Scoring. 1-38.
Rosing, M. V., Scheer, A. and Scheel, H. V. (2014). The Complete Business Process Handbook:
Body of Knowledge from Process Modeling to BPM.
Slack, N., Chambers, S., Harland, C., Harrison, A. and Johnson, R. (2010). Operations Management, 6th
ed. Prentice Hall London.
SME Banking (2015). Standard Chartered Bank Malaysia Berhad. Retrieved from
https://www.sc.com/my/sme/
Valacich, J. and Scheider, C. (2014). Information Systems Today: Managing in the Digital World, 6th ed.
Pearson Education Limited: Essex.
10