|
Increased Approval Rates and Reduced Credit Losses:
Bank Leasing Subsidiary
|
| SITUATION:
|
Risk manager for a copier, computer, and fax lender
|
| CRITICAL ISSUES:
|
- Client needs to maintain a high approval rate.
- Credit losses are too high.
|
| REASONS:
|
- Client is an office-equipment-specific lender and seeks tools tailored to its type of lending to provide process improvement.
|
| PAYNET:
|
- We conducted retro and swap set analyses on the lender’s portfolio and applicant population using the office score.
- The retro analysis showed the historical “bad” rates by score on booked deals, validating that the office score identifies risk for the client’s portfolio.
- We also looked at the number of approvals and declines by score to determine opportunities to reject the really bad deals and to offset those by increased approvals on the really good deals.
|
| RESULT:
|
- Credit losses were reduced by $10.2 million per year.
- Originations were increased by $5.1 million per year.
|
