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CASE STUDY

EXL used its expertise in risk modeling for a leasing company to build a suite of approval scorecards using alternate data sources

Introduction
The client, a leasing company, was using commercial data in the past for approval decisioning.

Solution
The objective of the initiative was to deploy EXLs risk analytics team to build a suite of risk score cards for existing and new customers using alternate data sources (internal or external) and to evaluate the improvement in accuracy of the approval decisioning process. EXL provided support along three lines of the initiative

Benefits
This modeling effort resulted in the following benefits for the client:

Challenges
The client was observing high rejection rates in the approval process. The client was looking to deploy analytics resources to assess the opportunity to reduce the high cost of commercial data and to validate if the existing approval process was working at optimal equilibrium given high rejection rates.

Enhanced usage of internal


and consumer data, resulting in reduced cost of commercial data purchase; thereby minimizing costs of acquisition

Analytics capability deployment to design and


execute the predictive risk modeling exercise.

Increased accuracy of approval


decision making resulting in lower overall rejection rates and greater average quality of approved accounts The impact over the 3-4 years post implementation is expected to be $10-15 Million.

Support development of an "actionable" strategy in


the form of easily deployable automated risk scorecards

Understanding of commercial data sources to create


blended scorecards at optimal operating points

EXL dedicated an offshore risk analytics team for the development of the risk scorecards in multiple phases. The team produced sophisticated hybrids of logistic regression models (SAS) with various non-parametric tools (CART and MARS) to address two business needs: an existing customer model using internal data and a new customer model using personal guarantor consumer data.

The advanced models enabled us to capture both additive effects and interaction effects efficiently. EXL tested the predictive power and robustness of the models and further assessed the optimal operating equilibrium which maximized the net benefits for the client through financial impact analysis of alternate cutoffs for the acceptance region. The client received detailed documentation to guide the implementation of these models in their production environment

ExlService Holdings, Inc. 2006-2010

www.exlservice.com