Developing multiple collection models and an analytics driven collection strategy for a leading NBFC
In order to maintain a healthy portfolio, it is not enough to identify the riskiness of a customer at the time of loan application. The lender should be cognizant that the customer’s circumstances may change over time, and it is, therefore, necessary to monitor the portfolio across the entire lifecycle of the customer. Collection models and strategies can help in this process. By incorporating collection models and data driven strategies within the existing collection process, lenders/collection agents can easily identify customers who need lesser interaction or contact for prompt payment – this frees up resources to be allocated more on individuals where there is need for more focus to bring the accounts up-to-date.
The lender’s internal data was used to develop multiple collection models, as well as collection strategies to enhance the existing process
Consumer lending in today’s time has shifted from traditional stringent lending policies to a more relaxed ecosystem, with focus on optimization of both risk and profit. However, with such relaxations, collection strategies need to be updated with new techniques and approaches to get ahead of future losses.
The new Challenger models and collection strategies were tested for 6 months alongside the existing process. It was observed that the new strategy yielded far superior results and was effectively able to optimize collection based risk to a much larger extent.
Post the testing phase, the client replaced the existing collection strategy with the new Challenger strategies