WHAT WE DO / SOLUTIONS BY FUNCTION
Risk Management
Collections & Write-Off
MORE PROFITABLE COLLECTIONS WITH LESS EFFORT
For companies that deal with various forms of consumer credit, including not only lenders, but also health-care provider groups, hospitals, utilities and telecom companies, the market scenario today is characterized by intense competition, a large base of consumer indebtedness triggered by the availability of cheap credit, and changing attitudes towards savings and debt. According to a recent industry survey, nearly three quarters of Americans believe that non-payment of debt is becoming more acceptable for consumers than what it was a decade ago. With consumers becoming savvier every day, traditional collections effort is becoming more expensive and less effective.
LatentView helps collectors develop a systematic process geared for collecting from the twenty-first century consumer.
Refresh / Develop Models: LatentView can develop or refresh analytical models that accurately estimate the risk of default / time to default for the accounts at different stages of delinquency. These models use techniques such as logistic regression, survival analysis, or Monte Carlo Markov Chains to model account payment behavior, in both consumer and small business lending scenarios. These models can be developed for various segments, which could be defined based on product types, risk levels, policy exceptions, demographics, or behavior. Finally, a variety of management reports are created to monitor and track model performance.
Segmentation: The next step is to prioritize accounts for collections. The approach is to use a cross-matrix of risk score with an attribute of value, such as outstanding liabilities, or account balance. Combining the two attributes, a cross-matrix is created, and metrics (such as loss rate, delinquency, recovery rate, etc.) are computed, to more precisely assess the risk-level for the portfolio.
Collection Strategy Formulation: Once the portfolio behavior is well understood, the next step involves formulating collection strategies. Client business managers formulate strategies for various segments, based on business goals, any areas of improvement identified, and corresponding score thresholds, along with clearly defined success criteria and timeline for implementation.
Implementation: Once strategies are formulated, appropriate operational optimizations can be derived. For instance, collector work loads can be distributed in an optimal manner, so that the best collectors get to work on accounts that have the maximum expected payoff. These business rules can be integrated with predictive dialers in contact centers.
Champion / Challenger Testing: Once the strategies are formulated, LatentView can help in evaluating their efficacy. To achieve this, test and control groups are formed, and the strategies are applied. The results provide a learning tool for identifying effective strategies.
Model Validation: LatentView can help in monitoring and tracking to ensure that scorecard objectives are being met. Monitoring includes evaluating the divergence between development and test samples through characteristic analysis or population stability reports. Tracking involves identifying relationships between the scores and the portfolio performance characteristics, across different sub-segments of the population.
LatentView’s approach allows an organization to observe the effect of new strategies, and know when to adjust their collection efforts, allowing them to focus their limited recovery resources and get more profitable results. This offers the potential for significantly improved operational and delinquency performance parameters for organizations of various types and sizes.
Risk Management
Collections & Write-OffMORE PROFITABLE COLLECTIONS WITH LESS EFFORT
For companies that deal with various forms of consumer credit, including not only lenders, but also health-care provider groups, hospitals, utilities and telecom companies, the market scenario today is characterized by intense competition, a large base of consumer indebtedness triggered by the availability of cheap credit, and changing attitudes towards savings and debt. According to a recent industry survey, nearly three quarters of Americans believe that non-payment of debt is becoming more acceptable for consumers than what it was a decade ago. With consumers becoming savvier every day, traditional collections effort is becoming more expensive and less effective.
LatentView helps collectors develop a systematic process geared for collecting from the twenty-first century consumer.
Refresh / Develop Models: LatentView can develop or refresh analytical models that accurately estimate the risk of default / time to default for the accounts at different stages of delinquency. These models use techniques such as logistic regression, survival analysis, or Monte Carlo Markov Chains to model account payment behavior, in both consumer and small business lending scenarios. These models can be developed for various segments, which could be defined based on product types, risk levels, policy exceptions, demographics, or behavior. Finally, a variety of management reports are created to monitor and track model performance.
Segmentation: The next step is to prioritize accounts for collections. The approach is to use a cross-matrix of risk score with an attribute of value, such as outstanding liabilities, or account balance. Combining the two attributes, a cross-matrix is created, and metrics (such as loss rate, delinquency, recovery rate, etc.) are computed, to more precisely assess the risk-level for the portfolio.
Collection Strategy Formulation: Once the portfolio behavior is well understood, the next step involves formulating collection strategies. Client business managers formulate strategies for various segments, based on business goals, any areas of improvement identified, and corresponding score thresholds, along with clearly defined success criteria and timeline for implementation.
Implementation: Once strategies are formulated, appropriate operational optimizations can be derived. For instance, collector work loads can be distributed in an optimal manner, so that the best collectors get to work on accounts that have the maximum expected payoff. These business rules can be integrated with predictive dialers in contact centers.
Champion / Challenger Testing: Once the strategies are formulated, LatentView can help in evaluating their efficacy. To achieve this, test and control groups are formed, and the strategies are applied. The results provide a learning tool for identifying effective strategies.
Model Validation: LatentView can help in monitoring and tracking to ensure that scorecard objectives are being met. Monitoring includes evaluating the divergence between development and test samples through characteristic analysis or population stability reports. Tracking involves identifying relationships between the scores and the portfolio performance characteristics, across different sub-segments of the population.
LatentView’s approach allows an organization to observe the effect of new strategies, and know when to adjust their collection efforts, allowing them to focus their limited recovery resources and get more profitable results. This offers the potential for significantly improved operational and delinquency performance parameters for organizations of various types and sizes.
