TEG starts with an enterprise Value Chain to help assess Macro and Micro Decision Support processes for BFSI organisations

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BFSI

Credit Risk

Analytics Area Business Questions Analytical Approach
Acquisitions
  • Am I maximizing the approval rates on new applications, while minimizing the bad rates?
  • Develop an Application Score. Optimize it along with the Bureau Score for best seperation of bads.
  • Is my current Application Score able to identify bads as efficiently as it used to do?
  • Model maintenance: regular validation, re-calibration of co-efficients or redevelop an Application Score.
  • My Application Score is developed on my own customer behavior. It comprises of only good customers that I had selected. It misses out on those whom I had rejected, who are also known bads. How do I develop a score that accounts for all bads?
  • Use Reject Inferencing to re-calibrate the Application Score to get true separation power.
  • Is my Fraud Score effective enough?
  • Validate and redevelop Fraud Score, if needed
Credit Exposure Management
  • What is the line loan amount/credit line I should extend to an application?
  • Validate Line Utilization/Credit Exposure sufficiency using On-us Data and Market Data to revisit your Credit Line Allocation/Loan Amount Assignment policies
  • Am I leveraging my customers appropriately?
  • Validate your Loan/Line Wallet Share on your customers to know if they are taking loans from others. If they are, you are missing out on opportunity. Proactive credit need identification will help you stem market share loss.
  • We do a lot of cross sell to our customers? But our Credit Policies are defined at product level. How do I know if I am over leveraging a customer?
  • Customer Level Credit expsoure management is the need of the hour when marketing is talking about maximizing relationship values with customers. Like a product policy, you should have a Customer Level Overiding Credit Policy, based on total leverage a customer can take.
  • Do you need assistance in assessing the risk of externalities on your portfolio and credit losses?
  • We do loss forecasting, loss-given-default forecasting for secured assets and Stress Testing too
Marketing & Portfolio Management

Analytics Area Business Questions Analytical Approach
Acquisitions
  • How do I optimize the returns from my marketing programs?
  • Use Response Scores to maximize responses from your Direct Mailer or other out reaching programs.Analyze your Channel Effectiveness to asses which channels are giving you highest returns and optimize your contact programs.
  • I have several marketing initiatives competing for the same budget. How do I decide scientifically on which programs to prioritize?
  • Forcast the returns in terms of NPV, ROI and ROE for all your proposed marketing programs through Financial Modeling that factors in your portfolio behavior and the charecteristics of targeting customers. Select the programs which promise maximum returns.
Existing Customer Management
  • How do I increase my portfolio profitability from my existing customers?
  • Segment your customer based on their purchase behaviors, and market behavior. Fine tune your offerings to existing customers based on the micro-segments. Also, check their propensities to buy your offerings through propensity modeling. Most importantly, assess the value of a relationship through Customer Life Time Value (CLTV) modeling and focus your efforts on most valuable relationships.
  • I do lot of cross-sell programs. How do I know which customer to target with an offering and when?
  • Understand the Product Life Cycle of your customers. Overlay it with Product Purchase Propensities. Then you can target the right set of customers with the right products and at the right time.
  • How do I address customer attrition?
  • Identify early indicators of attrition through customer segmentation, propensity modeling, or using unstructured data from customer service records. Roll-out retention programs pro-actively before the customer decides to leave your book.
Pricing
  • What is the right offer price I give in my marketing programs to optimize take-up?
  • Understand price elasticies of customer from analyzing historical data. Better still conduct Design of Experiments to understand price elasticities in controlled environment. Then optimize your price/response curve to maximze returns from your marketing programs.
  • I would like the price offered to match the Risk profile of a customer!
  • Risk-based Pricing at customer level helps to match the risk you take to the returns you expect. You can pro-actively manage the Risk/Return equation and take informed pricing deicisions.
Collections

Analytics Area Business Questions Analytical Approach
Collections Analytics
  • How do I prevent customer defaults?
  • Use Behavior Scores to identify which customers are most likely to default on your book. Roll-out Pre-emptive Customer Contact Program to minimize defaults in the first stage itself.
  • Can I fast-track collections on my customers if I know that they are definitely going to go to charge-off?
  • Identify High-risk segments in your portfolio and assign them to an agency or intensive collection program to minimize your losses
  • There are customers who are intentionally good. But due to change in credit circumstances, they are not able pay. What do I with them?
  • Identify the pool of delinquent customers who have the intention to pay but do not have the ability. Implement remedial programs to adjust the payment terms to match the paying capacity.
  • How do I optimize my collection expenses to bring down cost of collecting a $?
  • Identify self-cure segments and remove them from collection queues for a period of time. Use a Collections Score to identify customers who are likely to pay and keep them. Off load rest of the pool to external agencies or asset reconstructuring companies.
  • How do I allocate targets to my collection team across locations?
  • Right budgeting needs to factor in market reality, intrinsic channel efficienies, expected losses, and historical performace and remainin period of collections. Giving the right target helps better collections and boosts employee morale.

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