Post on 10-Jan-2016
description
N O V E M B E R 2 0 0 7
Chase Home Lending - New Product Development Process
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JU
Vice President – Product Design Leader
C O N F I D E N T I A L2
Overview
Overview of Chase Home Lending
Chase Home Lending’s 2008 Strategy
Strategic Recommendation for Product Development
Overview of recommended New Product Development Process
StageGate Process
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C O N F I D E N T I A L3
Chase Home Lending Overview
Chase Home Lending, subsidiary of JPMorgan Chase & Co.
Ranked # 5 in US mortgage originations, ranked # 4 as US mortgage servicer
2006 funding volume $172 Billion
2007 1Q-3Q funding volume $159 Billion
Originate and fund first mortgages and second mortgages 50 states, DC 17,000 loan officers
Origination Channels include: Retail – traditional retail, bank branch, call-center 41% Wholesale – mortgage brokers 23% Correspondents – banks, credit unions, mortgage banks 36%
Diverse first mortgage and second mortgage product portfolio
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C O N F I D E N T I A L4
Chase Home Lending’s 2008 StrategyStrategic Recommendation for Product Development
2008 Strategic Focus Attractive markets bank branch, domestic emerging
markets, correspondent. Leverage JPMorganChase brand Launch innovative, high margin new products and product
enhancements Move into top 3 origination ranking
Implement a new product development Focus on Gates and Stages Emphasis on predevelopment Defined product definition Tough go/kill decision points Focus on quality of execution
Success measured by Volume, Revenue and Profit
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C O N F I D E N T I A L5
Recommended New Product Development Process
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C O N F I D E N T I A L6
Discovery
Goal
Idea generation with a defined process for capturing idea.
Process
Re-launch of Voice of Sales – retail, wholesale, correspondent loan officers.
Introduce monthly product idea calls with sales leadership – retail, broker, correspondent
Regional Sales Meetings
Introduce broker and correspondent Idea Center www.chaseb2b.com
Voice of Customer – long-term B2B
Schedule B2B customer sessions – builder, domestic emerging markets, mass markets.
Leader’s Club Product Idea Sessions – Top producing loan officers.
Personal Banker/Bank Branch Loan Officer Sessions.
Mortgage Investors and Mortgage Insurance Companies
Research Friday’s – off site research for Product Design leaders.
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Existing New
C O N F I D E N T I A L7
Gate 1 Decision Point – Idea Screen
Goal
Filter the good ideas from the not so good ideas.
Focus is on identifying promising ideas based on criteria approved by leadership.
Deliverable
Ideas from idea bank
Criteria
Evaluate based on strategic alignment, market attractiveness, technical feasibility, killer variables. Market attractiveness - Minimum yearly volume of $100M? Technical feasibility - Origination and servicing requirements realistic? Strategic fit? Growth markets? Regulatory/Headline/Reputation? Killer variables? Regulatory/Headline/Reputation?
Key Decision Makers
Mid-management: Product design & development, IT, sales, legal, & credit
Output
List of ideas worth moving to scoping, scope due at Gate 2 within 45 days.
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1/5
C O N F I D E N T I A L8
Stage 1Activity - Scoping
Goal
Determine the ideas/projects technical and marketplace merits.
Tasks
Produce scope overview, cross-functional team involvement
Preliminary Market Assessment Attractiveness and potential Product acceptance
Preliminary Technical Assessment Impacts to systems – origination, underwriting, pricing, investor loan delivery &
servicing.
Preliminary Business & Environmental Assessments Cost and time to execute Financial Analysis Regulatory or legal risks Roadblocks
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Competition
Initial concept
1/5
C O N F I D E N T I A L9
Gate 2 Decision Point – Second Screen
Goal
Perform a second, more rigorous review of idea/project.
Deliverable
Scope document
Criteria Market attractiveness - Minimum yearly volume of $100M Profitability - ROC 15% Technical feasibility - Origination and servicing functionality (IT) Investor – mortgage investor realistic? Strategic fit - Growth markets? Regulatory/Headline/Reputation? Competitive Positioning Killer variables - Regulatory/Headline/Reputation
Key Decision Makers
Senior Management: Product design, product development, IT, sales, legal, & credit
Outputs
Decision of idea/project – Go?, Go, subject to?, Postpone?, Kill?
Move idea/project back to idea bank, or move to business case
Business Case at Gate 3, due date TBD.
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2/5
C O N F I D E N T I A L10
Stage 2Activity – Build Business Case
Goal
Conduct a detailed investigation of product, clearly define product, verify attractiveness.
Institute parallel cross-functional team participation.
Tasks
Market Analysis Target market definition Product concept
Definition – LTV, credit, mortgage terms
Technical Analysis Address all systems issues, LOS, underwriting, pricing, loan delivery and systems.
Business & Financial Analysis Strategic & competitive rationale Full financial analysis Investor commitment
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Positioning strategy
Product Benefits
ID customer needs, wants
2/5
C O N F I D E N T I A L11
Gate 3 Decision Point – Go to Development?
Goal
Perform a quantitative and qualitative review of business case.
Deliverable
Business Case
Criteria
Strategic alignment, market attractiveness, technical feasibility, investor commitment, financial analysis, & killer variables.
Key Decision Makers
Executive Steering Committee – Sales, Finance, Legal, Operations, Servicing
Outputs
Decision product – Go?, Go, subject to?, Postpone?, Kill?
Move idea/project back to idea bank, or move to development.
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3/5
C O N F I D E N T I A L12
Stage 3Activity – Development
Goal
Implement development plan, build product, & deliver partially validated pro-type.
Tasks
Emphasis is on technical work Loan origination, underwriting, pricing, delivery
Customer testing – Top B2B customers
Market development Monitor and research market and competitive environment Begin market plan – 4 Ps Develop marketing material – legal and compliance
Update business & financial analysis
Develop action plan for Stage 4
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3/5
C O N F I D E N T I A L13
Gate 4 Decision Point – Go to Testing?
Goal
Review development work
Deliverable
Mortgage product pro-type
Criteria
Continued attractiveness of project – market?, financial?
QC of development process – quality?, original product definition?
Financial analysis from Stage 3
Key Decision Makers
Senior Management: Product design & development, IT, sales, legal, credit & finance
Outputs
Go?, Kill? Postpone? Marketing plan reviewed by key decision makers
Approved test and validation plans
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4/5
C O N F I D E N T I A L14
Stage 4Activity – Testing and Validation
Goal
Test and validate the entire viability of project: the product, production process, customer acceptance and the economics of the project.
Tasks
Internal product tests - run a sample loan POS, underwriting, closing, servicing
External product tests - pilot production Key customers, test market in controlled geographies
Measure results Volume, application vs fundings, borrower segments
Business and financial analysis – based on new data
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4/5
C O N F I D E N T I A L15
Gate 5 Decision Point – Go to launch?
Goal
Review testing and validation results; focus is financial and regulatory.
Determine appropriateness of launch. Final stage to kill or postpone.
Deliverables
Results from stage 4
Criteria
Continued attractiveness of project – market?, volume?, financial?, ROC target achieved?
Well-developed marketing plan – Product, Price, Promotion and Distribution
Business & Financial analysis from Stage 4
Key Decision Makers
Senior Management: Product design & development, IT, sales, legal, credit & finance
Outputs
Go?, Kill? Postpone?
Marketing plan approved by key decision makers
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Green light to launch?!
5/5
C O N F I D E N T I A L16
Stage 5Activity – Launch, Go to Market!
Goal
Commercialization of product
Tasks
Implement marketing plan - production & operations Plan for retail, correspondent and wholesale Strategies and Objectives
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5/5
C O N F I D E N T I A L17
Post-Launch Review
Goal
At month 12, review project and product performance.
Migrate product to “standard offering” category
Tasks
Review financial projections vs actual
Review product profile, performance and early risk analysis Portfolio characteristics Early payment defaults Post-foreclosure reviews
Conduct post-audit – Product Design Leader and Product Development Leader
Cross-functional team participation What worked?, what didn’t work? Causes? Learning? Report results to
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