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Increased Approvals and Reduced Credit Losses:
Commercial Card Issuer
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| SITUATION:
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Vice president of risk management, commercial card issuer
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| CRITICAL ISSUES:
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- A 50 percent auto-decision rate results in a backlogged work queue.
- Client must maintain a high approval rate to attract new business.
- Given the emphasis on maintaining a high approval rate, credit quality is a concern.
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| REASONS:
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- The manual credit process is expensive and inconsistent.
- Manual processing costs exceed $50 per application.
- Lender has aggressive growth plans and thus needs a scalable originations process.
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| VISION:
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- Increase the auto-decision rate to reduce operating costs.
- Deploy better tools for identifying the really good and really bad accounts quickly.
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| PAYNET:
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- We conducted a retro analysis, which validated that the score identified risk for the lender’s portfolio.
- We scored approvals and declines to determine opportunities to reject really bad deals and to offset those by increasing approvals of really good deals.
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| RESULT:
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- Credit losses were reduced by $3.5 million per year.
- Originations were increased by $2.5 million per year.
- The auto-decision rate was increased by 10 percent.
- Operating expenses were reduced by $1.5 million per year.
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