Customer Portfolio Analytics services help organizations understand their customer base, increase customer profitability, optimize offers and pricing strategies, reduce acquisition costs, minimize business risks, optimize portfolio performance, minimize defaults and write offs and maximize profitability.
The Market Equations Centre of Excellence in India combines advanced analytics expertise and decades of consulting experience to help organizations in the Banking, and Financial Services industry better understand their customers, design and develop predictive models to predict future outcomes and take preemptive action to maximize profitability and customer life time value.
FREE Data Health Test and Consultation. Contact Us!
Market Equations helps one of the largest Car rental dealerships in the US build incisive and comprehensive predictive models to help the dealership predict profitable future loans while avoiding unprofitable loans, design optimum pricing strategies and optimize portfolio performance to maximize revenues.
Objective:
- Build a early warning tool that scores accounts based on their propensity to default
- Develop a credit assessment predictive model to identify and discriminate high risk customers and take necessary steps to minimize credit exposure (differential pricing treatments)
- Develop a portfolio evaluation tool that would output discounts based on profit margins, predict charge offs and prepayment with detailed cash flow of the portfolio till last payment
Customer Recovery Analytics outsourcing services from Market Equations India helps organizations identify accounts with the highest potential of repayment, improves recoveries, reduces bad debts and write-offs, optimizes collections and improves retention and customer profitability.
Case 1 - Early Warning Delinquency Scorecards
The objective of this model was to raise early alerts about the customers who are most likely to default or most likely to miss the payment in the next collection cycle. This helped in early identification of the risky customers during the life cycle of the loan so that proactive action could be taken.
Customer profile, payment and collection data of the last 2 years was used to build a robust predictive model that would identify accounts that have a higher likelihood to default. The tool is run on the 1st day of the billing cycle and uses a scoring engine to score accounts that have a higher propensity to default.
Outcome:
Collection costs reduced by 30 per cent and default rates came down by 9 percent.
Case 2 - Application Credit Assessment Predictive Model
Using the data available at the time of issuance of loan, a model was developed to predict whether the loan will turn profitable or unprofitable. The output was a score - higher the score more the likelihood of the customer turning profitable. This helped identify fraud at the application level thus, avoiding huge losses.
Historical data was used to build a robust behavioral scorecard that would predict charge off's and pre-payment accounts. At the time of loan application the tool uses applicant profile information to score the account based on risk propensity and categorizes the applicants into Low-Medium-High Risk segments.
Outcome:
The client was able to reduce charge off rates while keeping rejection rates at check and improving overall portfolio quality.
Case 3 - Portfolio Valuation Assessment Tool
Portfolio valuation is a must-have solution when buying or acquiring a portfolio. Using the data available at the time of acquisition e.g. monthly recovery pattern of portfolio, profile of the customers, and value of collateral (if any) the hidden risk in the portfolio is unleashed and the recovery amount from the portfolio is realized. Valuation when performed along with LTV provides a comprehensive view of the portfolio risk.
Historical data was used to build a regression model that would predict the discounts that could be passed on to applicants based on expected profit margins, predicted charge off and prepayment accounts and the detailed cash flow statements on the portfolio till the last payment.
Outcome:
The client could now evaluate portfolios based on all parameters and minimizes business risk substantially.
You can also explore our Customer Portfolio Analytics services including Application Bad Debt Predictive Model, Pre-Payment Model, Life time Value Model, interest rate optimization model and response models to name a few.
