Collection Analytics to Create Recovery Strategies for a Leading Consumer Bank
Overview
Our client, a leading private sector bank offering services across six verticals: corporate and institutional banking, commercial banking, branch and business banking, retail assets, development banking and financial inclusion, treasury and financial market operations, was facing a challenge of increasing non performing assets (NPA) or delinquent accounts.
The client wanted to analyze the delinquent accounts to mitigate its losses by creating personalized collection and recovery strategies.
Solution
TransOrg created two models to identify customers who would flow to the next bucket (who fails to pay even in the next month) or remain stable / normalize (pay the pending amount or clear previous dues).
For customers who flow to the next bucket:
- The preliminary step was to calculate the risk score associated with each defaulting customer
- Model was developed considering the following variables:
- Transaction data of last 6 months
- Credit Bureau score
- Responses during past collection attempts
- Daily credit card balance
Segmented the defaulting customers into 5 different bands (from very low risk to very high risk) based on the risk score from the model
