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Increased Approval Rates and Reduced Credit Losses:
Transportation Equipment Lender
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| SITUATION:
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President of a transportation equipment lender seeks to improve loan-originations process.
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| CRITICAL ISSUES:
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- The originations process is highly manual.
- The approval rate is low; some "good" applicants are declined.
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| REASONS:
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- Manually processing each new application is costly.
- There is a concern about inconsistent application of credit policy.
- The lender’s approval rate is far below the company goal.
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| PAYNET:
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- We retro-tested to find the transportation score for the lender’s booked deals.
- We analyzed decision-making practices to demonstrate the ability to approve high-quality applicants that were being declined.
- We recommended a swap set to reject low-quality deals and approve high scores.
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| RESULT:
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- Credit losses were reduced by 16 percent.
- Originations were increased by 5 percent.
- The overall value of this improvement was $2.7 million per year.
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