Thesis Archive

A System study on the credit investigation process in UnionBank of the Philippines (2012)

Anna Catherine D. Casiquin
Molly S. Eusebio
Frances Dominique T. Lim


-UnionBank offers a wide range of financial and related products and services. UnionBank offers foremost business activity such as corporate banking services, retail banking, consumer finance, and treasury operations. It offers a variety of commercial, retail, and corporate banking products and services. This includes traditional loan and deposit products, cash management services, trust banking, credit card services and electronic banking.

The study deals with the credit investigation department of UnionBank particularly the auto loan, which contributes to more than fifty percent (50%) of the incoming applications. The department has three units, the File Checking team, the Televerification team and the Filed Investigation team. The general objective of the system is to achieve the SLA of having ninety five percent (95%) of the Auto loan applications in a month to be processed within the competitive turn-around time (TAT) of four (4) hours starting from the receipt of applications until to the submission of report to the risk management department.

With thorough study and analysis of the banks current process in credit investigation of auto loan applications, it is considered that the most prevalent problem of the system is the delay in processing the application within 4 hours, which resulted to wide gap between the actual and the targeted service level agreement (SLA). The following states that problem statement from this study: There is a fifty-seven point sixty-six percent (57.66%) gap between the targeted and actual service level agreement for the year 2010 to 2011, which results to an opportunity cost of P442,465,865.83 per year.

The problem identified was further analyzed by breaking down its main root causes by using different problem analysis techniques such as the Ishikawa diagram, Pareto Chart, Why-Why diagram, and some interviews from the department head. From this, it was identified that the causes of delay in finishing the application within 4 hours were mainly caused by top 9 factors from Pareto Chart: older applications are processed late (15.52%), returns from field to Tele(14.56%), incorrect tagging (12.93), incomplete Tele report (11.01%), incomplete address (7.76%), unable to contact employer (7.54), no willing third party information (6.80%), Gnokii downtime (3.99%), and file checking database downtime (3.47%).

Some alternative solutions were tested per main causes of delay with the use of the Kepner-Tregoe Decision Analysis (KTDA) to determine which of the alternatives was the most appropriate in eliminating the identified causes. For the older applications are proceed late, creating an automated system for paperless transferring of applications between departments is proposed. For the returns of applications from Field to Tele, three solutions were identified as follows: automation, including authorization letter during investigation, and setting up agreement with the admin of villages/condominiums (if any) or barangay. As for the Gnokii downtime, the use of Blackberry is suggested and, for file checking database downtime, upgrading servers would be preferable. For incomplete Tele report, there are 3 solutions identified: placing a field in the application from for time availability of client, creating a database that contains the time availability of employer, and constructing standard business-like introduction for Tele CI. Lastly for the incorrect tagging, the proposed solution is also the automation of transferring and tagging of applications and having the file checkers check the co-makers credibility.

With the recommend solutions, the system performance is expected to improve from 64% to 92% of applications within turn-around time of 4 hours with the best-case scenario. As for the conservative perspective (worst-case scenario), it is expected to improve to 84%.

Considering a conservative perspective, the computed net present value (NPV) of the recommended solutions is Php 339,620.74. The company would be able to retrieve its initial investment of Php 835,786.45 in about 2 years at Minimum Acceptable Rate of Return (MARR) of 15%. This indicates that the proposed solutions are feasible.


Mr. Jose Edgar Mutuc