Client: Leading auto finance company

Industry: Financial Services

Business Impact: • Risk-based decision and pricing strategy• Automatic customer scoring• Performance monitoring

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Leveraging risk analytics for improving loan origination process and managing customers

Business Challenge

Based in the US, the client is a niche auto finance company providing auto loans to consumers for pre-owned automobiles. It offered services across different states in the US. It worked through an extensive network of automobile dealers to provide its lending products to the consumers. The company approved all loan applications at the origination stage, however, the decision around risk was controlled through the variation in approved loan amount, interest rate and loan tenure. Also, all the approved loan application did not translate into customers for the client as the consumer might have other preferred choices available. The client wanted to build an analytics-driven solution across the entire customer lifecycle for managing risks, profitability and growth.

Solution

On a broad level, Blueocean Market Intelligence aimed at:

• Designing a scientific approach to credit approval process• Developing dynamic and innovative scorecards/strategies to drive smart

growth while managing losses• Enabling recalibration and regular refresh of customer segments, risk tiers

and models• Performing constant and accurate monitoring of portfolios on key

performance metrics

Case Study

A step-by-step approach for building a holistic set of solutions, covering every aspect of the customer lifecycle, was followed. To make the most of the growth in demand for loans, business lenders needed this critical process to run at the maximum speed and efficiency while helping them determine the right credit terms, manage risk, comply with a growing body of regulations, and provide differentiated customer service. The major steps were:

• Data management - Profiled, modeled, extracted and automated data into one repository

• Loan origination process - The following initiatives were taken:

o Risk Score/Risk Segmentation – Statistical evaluation of the borrowers’ characteristics o Risk-based pricing model – Based on the riskiness of the customer o Real-time decision making application – Lending portal for monitoring performance, decision support and automated scoring of customers

• Performance management solution - Key KPIs and metrics were tracked to understand how the overall portfolio is doing

Outcome

The overall efficiency of the loan management system improved and a better management of the entire process was ensured. The key results were:

• Data integration for origination and performance data

• Formulation of risk-based decision and pricing strategies based on customer risk and propensity to not to take up the product

• Blueocean Market Intelligence’s lending portal helped in monitoring performance, decision support and automated scoring of customers

• Improved efficiency, compliance and customer service by boosting lender’s visibility into key aspects of the portfolio

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About Blueocean Market Intelligence

Blueocean Market Intelligence is a global analytics and insights provider that helps corporations realize a 360-degree view of their customers through data integration and a multi-disciplinary approach that enables sound, data-driven business decisions.

Since we live in a highly dynamic and multi-dimensional world, we believe the most effective business decisions come from a synthesis of data streams and not from one-dimensional sources.

Using our 360 Discovery approach, we ensure the comprehensive use of all available structured and unstructured data sources, enabling us to bring the best to bear against each engagement. Strong decision support is enabled through a combination of analytics, domain expertise, engineering and visualization skills brought together in harmony.

Leading companies have benefited from our partnership with financial growth, 360 views of their markets and competition, and improved customer acquisition, satisfaction and retention.

For more information or to request a consultation, please email info@blueoceanmi.com or visit us online at www.blueoceanmi.com.

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