The ever-expanding Chinese market offers great opportunity in the area of retail banking, a fact that was exploited to great advantage by our client, a consumer finance institution. After a successful sales start-up and quick growth, it became apparent that a substantial number of loans were never going to be paid due to an alarmingly high fraud rate in the portfolio. Adastra Business Consulting was hired to help this company salvage the opportunity and turn things around. A five-member rescue team was employed and fully dedicated itself to taking over management responsibilities.



Suspicions begin at branch levels


Numbers to Prove

Approval rates are decreased for the given branches


Investigation for Meaningful Action

Suspected dishonest employees are identified


Corrective Action

Employee approval privileges are temporarily suspended until fraudulent actions are proven resulting in employees being dismissed, or prosecuted based on ensuing losses, and branch managers being replaced.

By consistently applying this process, the sales network came to realize that there was zero tolerance of fraud. Subsequent motivation schemes for all sales people were developed hand-in-hand with this process with the scheme being simplified and adapted as an easily calculated aspect of reporting. The sales force, now required to comply with the scheme and taught to disapprove suspected delinquent loans, were motivated by the rewards that accompanied a high volume of successfully paid loans. Employees received premiums for good loans and lost money when loans turned out to be delinquent.

This quick fix led to improved underwriting: a barrier to deny would-be fraudsters. The fraud score card expert set-up and supporting verification process was easy to design on paper but needed specialized training from skilled professionals. The IT system had to calculate scores and the software system had to contain the specific workflows to be executed in the given scenarios with no verification for the best clients and demanding and detailed verification used with the worst clients. Operator verification training was essential as these people were both collecting and evaluating information in the verification process.