Case Study: Credit Card Sanction A financial institution wants to automate the process of

approving or denying credit card applications to improve efficiency and reduce costs. The
institution has historical data on past credit card applications, including details such as
income, credit score, age, gender, employment status, and other relevant information.
Solution Pipeline: Data Collection and Preprocessing: The institution collects and
preprocesses the historical data on past credit card applications to create a dataset that can
be used for training and testing machine learning models. The dataset is cleaned and
prepared by handling missing values, outliers, and other data quality issues. Feature
Engineering: The institution identifies relevant features from the dataset and creates new
features that can be used to improve the predictive power of the machine learning models.
For example, the institution can create new features such as debt-to-income ratio, credit
utilization ratio, and payment history. Model Training and Selection: The institution trains
and evaluates several machine learning models using the preprocessed dataset. The models
include logistic regression, decision trees, random forests, and neural networks. The
institution selects the best-performing model based on the evaluation metrics such as
accuracy, precision, recall, and F1 score. Model Deployment: The institution deploys the
selected machine learning model as a credit card sanction engine. The engine takes the
applicant's information as input and predicts the probability of the applicant defaulting on
their credit card payments. The engine also provides explanations for its predictions, such as
the relative importance of the applicant's features in the prediction. Model Monitoring and
Improvement: The institution monitors the performance of the credit card sanction engine
and continuously improves it over time. The institution can retrain the model periodically to
incorporate new data and adjust the model's hyperparameters to improve its performance.
User Interface: The institution develops a user interface that allows the loan officers to enter
the applicant's information and view the sanction decision and explanations for the decision.
Human Oversight: Although the machine learning model can automate most of the credit
card sanction decisions, the institution still needs human oversight to handle exceptional
cases and ensure fairness and compliance with regulations. Overall, the solution pipeline
involves collecting and preprocessing data, performing feature engineering, training and
selecting machine learning models, deploying the selected model, monitoring and improving
the model over time, developing a user interface, and providing human oversight. The
pipeline uses machine learning and neural networks to automate the credit card sanction
process and improve efficiency while ensuring fairness and compliance with regulations.