Charles Schwab Case Study

schwab.com

A member of the Normal Modes team recently went through the laborious process of buying a home. What a fantastic chance to demonstrate the importance of streamlining a process! We created a sample Website Usability Review for Schwab.com's Mortgage Services division, with special emphasis on progress tracking and refining the user experience. (It was quite cathartic, actually.) We like to think our little version of paying it forward could save home buyers time and energy in the future.

Services

$2.1 Million.

That's the savings we estimate Charles Schwab would have realized in 2009 by incorporating basic process automation into its mortgage services website.

Schwab's current mortgage application process requires a lot of back-and-forth on the phone. We spent an hour on the phone with a rep while he input our application data, another 15 minutes to generate a pre-approval letter and then another hour when we locked in our rate and sent the application to "Processing." That doesn't include the dozen or so calls to verify application data, check interest rates and answer our numerous questions.

Call center-based applications like this are expensive; they require more resources and take considerably longer to process than web-based applications. Therefore, there are significant cost savings to be gained by offering customers an automated web application. The savings in this example apply to the home buying/mortgage industry, but similar savings can be realized in any industry.

Let's do the math. On average, the fully-loaded (direct/indirect labor, taxes, benefits, rent, utilities, telecom, etc.) cost for a call center is $1.50/min. So the 135 minutes we spent on the phone cost Schwab:

If you factor in 10 of those extra calls for questions and data verification at, say, 5 minutes each, then:

Therefore, the total savings by having basic process automation for the website:

$2,109,000 in 2009

Sure, savings of $2.1 million provides a great incentive for automating the mortgage process. But automation offers more than economic advantages for Schwab — there also are significant intangible advantages. Notice that we sat on hold for more than an hour during each of our calls to Schwab. Historically low interest rates generated unusually high call volumes, and mortgage call centers were struggling to keep up.

No one likes to wait on hold, especially for more than an hour. And in the case of locking in interest rates, time really IS money. If we could have submitted our mortgage application, generated a pre-approval letter, locked-in our interest rate and handled any other mortgage business on line, we would have been happy campers. Instead, we're sure we weren't the only customers cursing the velvet-voiced "please stay on the line" hold message.

Schwab's lack of basic process automation is more than bad business economics; it's a bad user experience for their customers.

¹ Fully-loaded call center costs per minute, including direct labor, indirect labor, benefits, taxes, rent, telecommunications, etc.
² Estimated number of residential real estate mortgages processed by Charles Schwab in 2009.

Of course, we didn't just find ways Schwab could save $2.1 million per year. We also provided:

1) Critical analysis of information placement and calculator refresh issues

2) A summary of confusing/inconsistent navigation throughout site



3) A prioritized, actionable list of improvements along with estimated level of effort and potential benefit to the end user

And we suggested other user experience enhancements, like "On Demand Pre-approval Letters." This feature would allow customers to generate pre-approval letters for exactly their bid amount during contract negotiations, never revealing to the seller (or agents) how much the buyer is capable of paying.