Credit Card Industry Best Practices

CREDIT CARD INDUSTRY
ANALYTICS
Prepared for SAMBA Financial Group
Confidential and Proprietary

Analytics Best Practices
In Service Based economy, financial institutions are continuously embracing the power of analytics to
gain insights and appropriately evaluate risk and opportunities
Analytics helps in each phase of Customer life cycle by providing insights that lead to driving higher
revenues by creating and nurturing long term customer relationships
Prescriptive
Analytics
Analytics
n
Predictive
zatio Analytics Enables
i
Value delivered
Analytics ptim
O
Diagnostic Growth
Analytics Initiatives Well Managed
Initiatives
Descriptive
Intelligence
Business
Analytics
n
atio
or m
Inf
Complexity
Descriptive Analytics Diagnostic Analytics Predictive Analytics Prescriptive Analytics
• Dashboarding • Portfolio Analysis • Cross Sell/ Up Sell Models • Design of Experiment
• MIS Reporting • Exploratory Analysis • Risk Scorecards • Proactive strategies
• Strategic Reporting • Segmentation Analytics consuming predictive
(P&L, Risk and Vintage • Collection/Recovery analytics
Reporting etc) Strategy • Consulting
• Account Management
Confidential and Proprietary 2
Analytics Maturity
Translating consumer insights into concrete initiatives that drive above market growth
Low Medium High
Product Profitability view Per Account Profitability NPV (Predictive)

Profitability
(Historical)
Basic Segmentation Ex: Rule base segmentation Behavioural Segmentation

Transactor / Revolver etc Ex: RFM segmentation, / Life Stage segmentation
Segmentation Profitability segmentation Ex: Balance builder, Value
spenders etc
Risk based criterion Use of propensity models Risk, profitability and

Ex: Target never 30 etc for better targeting propensity for better
Cross-sell targeting
Risk scorecards for Sophisticated risk

Heavy reliance on
acquisition and portfolio scorecard for acquisition
underwriters and rule
risk management and portfolio risk
based acquisition risk
Risk management
Rule based generalized
Early warning indicators,
transactional / behavioural
Auth strategy, OVL
portfolio risk management
Proactive CLI / CLD

Analytics Maturity… contd..
Translating consumer insights into concrete initiatives that drive above market growth
Low Medium High
Generalized campaigns Segment level campaigns, CVM, Real time, trigger

Campaigns
Ex: CLI – Target all or risk Using risk view or based campaigns
based targeting marketing view Design of Experiments
(propensity) in silos 360 degree view of
consumer
Multi Channel targeting
using Channel propensity
No or Generic bureau Bureau based analytics, Extensive usage of bureau

score usage in policies Usage of bureau to refine / to drive profitable growth,
Bureau Usage and marketing enrich models life stage targeting,
effective cross-sell and
up-sell opportunities
Random treatment, Segmental treatment,

proactive retention efforts, Customer level
Customer Unidimensional touch engagement, Enrich
points created for Product upgrades etc
Experience overall bank relationship,
consumers,
Multi touch points, Loyalty
Reactive customer optimization, proactive
retention efforts retention and engagement
Industry Leaders Interweave Analytics into everything
Business Function Decision/ Support requirement Our Service offering(Partial List)
Customer
 How can I acquire new customers ? Cross sell models / Behavioural
 How can we measure customer lifetime value? Segmentation
 How should we price our products?
Marketing  How can we target customer campaigns? Retention / CLTV
 How do I retain my best customers ? Attrition Model
 How can we optimize marketing spending?
 What kind of risk mix, do i have ?
 How do I forecast my demand ? Campaign NPV
Up sell models
engines
 How do I accurately assess the risk in my Risk Based Application

portfolio? Pricing scoring
Risk and Fraud  Identifying high risk customers ?
 How to capture my fraud customers? Customer
 Which customer to retain ? Exposure Fraud Scorecard
Management
Collection Channel
 How do I accurately forecast P&Ls? Strategy management
 How do I optimally capacitize operations?
Operations  How to optimize the channel cost ?
 How to identify customers who shows similar Design of
Look alike model
behaviour ? Experiments

Analytical Interventions Across Customer Life Cycle for
better Customer Experience & Higher Profitability
Acquisition Activation Account Value Management Retention Reactivation
Prevent attrition and

balance erosion
On-board and X-sell / Up-sell
Activate customer
Identify high Usage and engagement

potential segment Balance build up
and channels Risk management Activate inactive
X-sell / Up-sell customer
Win back
• Mail-base • Spend Inducing • Behavioral Scoring • X-Sell • Line Increase

expansion / lead strategy • CLI/CLD • Upgrade • Promotion Pricing
scoring • Customer • Collection Queuing • Bureau based • Card upgrade
• Application Scoring Segmentation • Card Upgrade/Reissue testing • Reactivation
• Pricing/Limit • Value Proposition/ • Recovery Scorecards • Campaign Design Campaigns
• Channel Rewards
• Generic Cross Sell- PL, AL,
Propensity Mortgage Products
• Cross Sell to CASA • Next Best Product Strategy
base

Campaign Management Program
An accurate assessment of engagement helps retail banks make right investments in Customer Segments
Campaign Management Program
Fee Growth &

Spend Growth Balance Growth Risk Mitigation Stickiness
Others
POS / Online
CLI CLD Bill Pay VAS
Campaign
International
Quick Cash Auto Pay Point Redemption Authorization
Campaign
Cash Back Re-pricing E Statement Reg
OL padding / Auth EMI / Payment

Strategy Holiday Retention
Early Activation
Upgrade
Program
Add on Card
Reactivation –
NUNP / Inactive
Begin with a Disciplined Approach to Customer
Segmentation
Self aware Balance Builders; 4% Least engaged; 8%

avoiders; 7%
Bank Primary
7%
Big Jumpers; 10%
Value Spenders; 9%
Passive; 26%
Steady; 4%
Regular
Revolvers;
9%Emergency Swipers; 6% Underperformer; 7%
Heavy Spenders; 3%

Analytical Solution Framework
Our analytical framework create predictive models and analysis by using raw variables from the Bank and credit bureau, and drives
significantly higher ROI and business usage by quick integration of outputs in the application layer
Differentiated Data Analytical SandBox/Data Mart SAS Client Server Analytics Architecture
SAS Server Equifax Team
Bureau Raw Variables Trusted &Data

Anonymized
flow to
View ofand
Consumer
fro
Credit lines Status Profile between SQL SAS
All Joins and transitions Makes
Created In the EDWDB server and Modeling
Data Request
environment Application Analytical
layer Processing/ Tools
Resultant
Data from Business Temp/Permanent tables Modeling/
Dataset
Product Txns
Income Basis Analytical requirements Analytics
Lines
Coded back
Derived Variables
Into EDW Outputs
Offline Systems
Special Up to 48 months of history
Campaigns Budgets
Programs
Models Validations
APPLICATION LAYER
• Regular feed from Bureau mart
• Significantly improves the
predictive power of models
• Regular insights on customer Analyses Campaign
off-us behavior
• Tracking, evaluating test and
Other Applications learn, model stability

Technical Capabilities in BI and Data Management
Our engagements are defined by the client’s current maturity
on Information management and analytics capabilities
Data Problem Solving
Intelligence & Consulting
ODS and Embed analytics Channel

Enterprise Data
Reporting into Reporting Management
warehouse
Datamart solutions Framework
Analytical A-score/B-score
Master Data Data Mining to
Datamarts for integration with
Management generate in-sights
depts./units CORE systems
Data Extraction, Streamlining Automation of

cleansing & Prospect Data Quality
validation Management Assessment
Reporting &
Dashboarding
BI Technology Agnostic – MS SharePoint, Cognos,

SAS, BO and QlikView
Single customer
Automation of MIS Business friendly
View across
/ BI Rule Builders
depts./products

Typical Data Sources Considered for Analytical
Purposes
Business Demographics Performance Data
• Applicant age • Credit Limit
ILLUSTRATIVE • Total family income • Credit Balance
• Working status • Maximum Balance in last 12 months
• Time in current job • Finance charges in last six months
• Resident Status • Late Fees in last six months
Exclusion Data • Number of times revolved in last six
• Charge Off Date months
• Charge Off Amount • No. of times X,30+,60+ in 12 months
• Days past due in last six months • Time since last delinquency
• Time since account active • Minimum payment incidence
• Payment rate over 6 month
Development • Maximum delinquency in last six
months
and Validation • Velocity Data over 6 months
Transaction Data Base Data •Change in utilization
• Spends •Change in Balance
• Retail behavior •Change in Rev rate
• Cash spends
Service Request Data
Competitors Data Credit Bureau Data

• Maximum credit line in the wallet • Number of credit lines open
• Most recent card open date • Number of enquiries in last six months
• Revenues in last six months • Maximum delinquency in last six months
• Number of derogatories in last six months

CAMPAIGN MANAGEMENT

Campaign Management Framework
Our analytical approach will help across the lifecycle of campaign
1. Planning
 Ideation & Design
 Fulfilment identification
5. Fulfilment 2. Execution
 Adhoc and Complex

execution
Campaign Management
Framework
4. Analysis 3. Reporting
 Monthly diagnostic  Early response tracking

 Quarterly deep dive  Weekly dashboards
 Strategic review  Monthly dashboards

Campaign analysis framework
Measurement of campaigns and Campaign Management Process Effectiveness
Improve Typical business challenges Related analytics solutions

response rates • Improved speed to market • Rapid test and learn
• Better targeting • Campaign Tracking
Increase SOW
• Optimum contact strategy • Campaign ROI Analysis
(share of wallet)
• Customized offers • Customer segmentation
Improve revenue • Cross sell Up sell • Response Models
Optimal pricing • Loyalty schemes • Customer Lifetime value (CLTV)
for segments modeling
• Credit line Increase • Program optimization
Maximize ROI on Expand mail able • Optimize pricing strategy • Pricing scorecards
campaigns universe
• Reduce attrition • Risk based pricing
• Churn prediction
Reduce cost of
Reduce losses • Maximize targetable universe • Contact HeatMaps
debt
• Annual
Channel
• Assessing Risk
optimization • Exposure measurements • Fraud prediction
Reduce cost of
campaign
• Optimize channel strategy • Segmentation
Optimization of • Channel profitability analyses
fulfillment
incentives
• Optimize incentives offered • ROI analyses of campaigns

Suggested measurement and monitoring
approach Key Deliverables Decisions Supported
A
Early Read • Response KPIs:Response rates, • Are the targets being met
Weekly
response approval rates, fulfillment tracking • Short term opportunities

Tracking • List penetration to move volumes
• Channel efficiency • Test-control results
• Frameworks for new campaigns
B
• Track leading indicators of ROI – • Adjust monthly plans
Monthly
Monthly
spend, fee income, contact cost • Test roll outs

Campaign • • New test ideas
Compare across campaigns , periods
Diagnostic & segments
• Validate test vs. control hypothesis
C
• Forecast campaign ROIs • Optimizing marketing
Quarterly
Quarterly
• Provide guidance on components of investments

Campaign • Tweaking the components
campaign driving NPV – offer,
Deep Dive pricing, targeting of campaigns
• Recommendation for new tests and • Discontinue unprofitable
killing non performing campaigns programs
D
• Evaluate the effectiveness of contact • Are we measuring the right
Strategic
Yearly
strategy results
Review • Portfolio level impacts of campaigns • Optimization across
• Consolidated campaign ROIs by segments, channel and
program, campaign ,segment & campaigns
channel • Prioritization of campaigns
• Budget simulations • Contribution to bottom line

Sample intervention framework for Credit Cards
Using Analytical models, we can target the right customer through a cost-effective channel thereby providing
15 – 25% lift in revenue or 10 – 15% reduction in costs for the same revenue
Maximize Revenue per Customer
New
Customer Customer Value
customers Retention Win Back
Engagement Management
Acquisition
Customer Loyalty and Experience Management
On-boarding <= 6 MOB : Early usage Build balance & revenue Gate profitable balance Re-engagement
& customers
• Application • Welcome Call • Pro-active Pricing Reactive • Upgrade and Flip
processing update • Spend-and-Get • BT, EPP • Price-offs • Promotion Pricing
• Cordial verification • Payment convenience • CLI (including upgrade • Products • Promotion BT pricing
spiel • Utility bills and 2nd card x-sell) • Service assurance • CLI guarantee
• Delivery TAT • Discount Certificates • Rate Sales • Rate Sales
• Welcome kit triggers • BT / EPP offers • Rewards Proactive • Add on’s
• Payment reminders • Sale’s Leveraging Customer Gating model • Rewards
• Insurance cross sell • Usage / bal drop
> 6 MOB : Build usage • Preferential offers on other • Fee / charges levy
• Dormancy checks Retail products
• BT and Loans • Proactive Upgrade
• EPP • Subscription pricing
• Trigger revolve
• Rewards marketing Model to trap
• Supplementary Card repayment skews and
suspect BT-out
Merchant tie-ups
Triggers at Point-of-Sale and Point-of-Payment
| Confidential and Proprietary

Sample trigger led intervention for Cards
Analytics can help refine and simplify the decision of which customers to target.
With some historical trends, we can also build models to predict balance attrition.
Payment skew
Payment Protection
Spend Skew
Instalment Plan
Daily Repayment
Cash withdrawal
Cash on EMI
Daily Spends
Mon Tue Wed Thu Fri Sat Sun Mon
Tracking abnormal Daily Monitoring of customer spends basis VISA / MASTER files
behaviour Daily monitoring of repayments / Balances
Opportunity EMI CARD – graduate from post-facto to Point-Of-Sale

Statement tear-off and e-statement mail-back – to capitalize on impulse

CASE STUDIES

CARDS PROFITABILITY

Cards profitability model construct
Historical account
Functional Forms
level data – Portfolio
from Vintage Curves
KPIs and detailed
for identified Segments
revenue lines
User Inputs
Acquisition Inputs
Segmentation
Framework – 1. Monthly acquisition data
Forecasting Engine Profitability Tool
Combination of 2. Product wise APR
for Revenue Drivers
Product and 3. Fee inputs
Vintage 4. BT Penetration variables
5. Offer information
Portfolio Inputs
1. Fee assumptions
2. Cash, Purchase and BT Rate
3. Attrition
4. Cost Of Funds
5. Debt
6. Cost
Revenue Drivers –
Key Portfolio
parameters which
drive portfolio P & L
Calculation
Algorithm

Cards profitability – Vintage Forecasting
Retail balance per card Retail balance per card By Vintage
4,000 4,500
3,500 4,000
3,000 3,500
2,500 3,000
2,500
2,000
2,000
1,500
1,500
1,000
1,000
500 500
- -
Portfolio 2005 2006 2007
Retail balance per card By Vintage and MOB

5,000 • The basis for vintage forecasting is simply the
4,500 process of modeling portfolio performance as a
4,000 function of month-on-books.
3,500 • The graph on the upper left is an aggregate view of a
3,000 sample revenue driver for an entire portfolio.
2,500 • The graph on the upper right shows the exact same
2,000 portfolio, but now separated into finer segments called
1,500 vintages.
1,000 • The graph on the bottom shows the same vintages
500 but after being re-aligned on a months-on-books basis.
- This view is key in modeling portfolios that are growing
and dynamically changing
12
16
18
20
22
24
26
28
30
10
14
0
2005 2006 2007

Cards Profitability - Vintage forecasting framework
Cash spend per card
MOB based Functional 400 Cubic Eq.(MOB 2-8) Moving Average (MOB 8+)
Forms 350
300
250
200
150
100
50
0
Linear Eq.
Y=110.25*X+94.57
2005 2006 2007
Predicted Values utilizing 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

forecasting equations JAN07
FEB07 Y=-2.69X^3+44.84*X^2 Y=(X-1+X-2)/2 31
MAR07 -239.54*X+458.89 78 77
APR07 110 110 110
MAY07 es 46 45 46 45
JUN07 l Valu 61 61 61 61 61
i a
JUL07 Init 58 57 57 57 57 57
AUG07 57 61 59 60 60 60 60
SEP07 91 81 86 84 85 85 85 85
OCT07 69 89 79 84 81 83 82 82 82
NOV07 43 28 36 32 34 33 33 33 33 33
DEC07 47 49 31 40 36 38 37 38 37 37 37

Cards Profitability - Detailed P&L
The model will creates detailed yearly P&L with the option to view monthly P&L
Cummulative Three Year Figures Portfolio

EOP No of accounts 1,636
EOP Outstanding Balance 18,176,568
Break Even Period 21 Months
Back to Input Screen Detailed Monthly P&L
Return On Marketing Investment 33%
Total Income 1,781,412
Losses 704,424 Detailed monthly P&L
Costs 864,892
Charts and Trends
accessible at the click of a
Profit 212,096 button
NPV 135,267
Portfolio KPIs
Year 1 Year 2 Year 3 Cumm 3 Year Key Ratios Year 1 Year 2 Year 3
KPIs
Average CIF 1,443 1,958 1,729 1,710 GII/ Outstanding Balance 7.18% 9.91% 9.35%
EOP CIF 2,099 1,845 1,636 1,636
Attrition Rate 10.9% 12.8% 12.0% 11.9% COF/Outstanding Balance 7.39% 7.46% 7.47%
Average Outstanding Balance 4,283,199 8,208,906 16,540,607 9,677,571
EOP Outstanding Balance 7,101,776 11,065,419 18,176,568 18,176,568 Net Interest Income/Outstanding Balance -0.21% 2.45% 1.87%
P&L Lines Non Interest Income/Outstanding Balance 8.73% 5.80% 2.60%
Total Net Interest Income -9,023 201,243 309,935 502,155 Total Income/Outstanding Balance 8.52% 8.25% 4.47%
Total Gross Interest Income 307,568 813,373 1,546,127 2,667,068
Total Cost Of Funds 316,591 612,130 1,236,192 2,164,913 Losses 1.08% 1.84% 3.06%
Total Non Interest Income 373,823 476,062 429,371 1,279,257 Costs 15.72% 1.24% 0.54%
Total Income 364,801 677,305 739,306 1,781,412 Cost Income Ratio 185% 15% 12%
Total Losses 46,411 151,071 506,943 704,424 Net Profit/Outstanding Balance -8.28% 5.17% 0.86%
Total Costs 673,139 101,822 89,930 864,892

Cost of acquisition 405,000 0 0 405,000
Underwriting cost 139,091 0 0 139,091
Credit Verification cost 54,000 0 0 54,000
Annual maintenance cost 75,048 101,822 89,930 266,801
Net Profit -354,749 424,412 142,433 212,096

Cumm Net Profit -354,749 69,663 212,096
Discount Rate 10%
NPV 135,267
Detailed P&L

BEHAVIOR SCORECARD

Effective Behavior Scorecard Development Process
Strategy & On-going account
6
• The entire population is scored to arrive at scores which would discriminate the management
potential good accounts from the bad accounts for early delinquent portfolios
5
• Multiple model iterations are carried out using the resource pool of variables to
arrive at the statistical model which provides maximum separation of goods vs 6
bads. Logistic Regression is the proffered technique used Scoring the
Population
4
• A large resource pool of independent variables across Performance,
Demographics & bureau behavior are created and tested for statistical 5
significance by considering multiple data sources. Model Iterations
• Suitable development and validation samples are chosen which best represent
3 the portfolio characteristics. Performance window selection and Bad definition 4
are chosen using Roll rate analysis, Vintage analysis and also aligned with Variable Creation &
selection
business objectives/policies.
Identify segments of population which exhibit significant

3
2
•
Sample Selection
differences in their behavior
2
1
• Detailed Portfolio analysis is carried
KPI metrics
out to identify the
Segment Creation
1
Portfolio Diagnostics

Behavioral score strategies for Cards
The Behavioral score can support a host of portfolio management strategies for the loan / credit card business
Illustrative
Risk
1. Authorization strategy – Behavioral Scores can be pushed into the loan management / card system where they can be used
for setting authorization parameters, shadow limits, card blocking, etc.
2. Credit Line Decrease – High Risk customers identified through a low B score can be targeted for reducing the lines
proactively
3. Collections queuing- B scores can be used to prioritize collection queues
4. Cards reissue/reinstatement- B scores can be used for deciding on whether reissue of cards needs to be done for customers
5. Portfolio quality assessment- B Scores can be used to assess and track changes in the portfolio quality.
6. Balance transfer and EMI criteria- BT/ EMI criteria setting can include a B s-core cutoff.
Marketing
7. Cards cross sell - B score cutoffs can be employed for selecting customers for cross selling other products like PL,
mortgages, etc.
8. Upgrades- Card upgrades can be done based on B-scores
9. Credit Line Increase- CLI can be done for high scoring B-score customers

Behavioural Segmentation to drive Cross Sell & Up Sell
Equifax helped A Major Bank understand the behavioral aspects of its Credit Card Customers to drive
cross-sell and up-sell
Case
• Scenario • Balance per card was coming down with increasing multi-carding in the industry
• Problem Statement • Non-Funded Income was also coming down because of changing market dynamics on annual fee
• Sustaining cards profitability had become biggest challenge faced by any cards business
Solution
• Create a segmentation
framework • 7 scorecards/Business Rules were developed to optimize both response and pricing
• Develop cross sell & up sell
scorecards
• Cards portfolio was segmented based on Revolve rate, Balances and B-score and 11 segments
were finalized
18% increase in
Business Impact product/customer
40% customers over 18 months
• Better contact Management upgraded
• 40% customers upgraded
• Improved Account selection
for mailing
75bps improvement in 15% reduction
Spread increased in contacts.
by 300 bps in 24 months installment lending products
by using pricing models

Nettpositive developed a Loss forecast model for Retail
Portfolio of a Major Bank
Nettpositive developed a Loss forecast model for Retail Portfolio of a Major Bank
Case & Objective
• The Private Bank was expanding quite rapidly in the retail segment after having transformed itself
• Products: Credit Cards, 3 years ago
personal Loans, Home • Different book segments and vintages were experiencing different loss rates with the predictability
Loans, Loan against property, of loss lines becoming difficult and complex to predict
Auto loans and some small • Cross product charge-offs were hitting the final loss lines with no means to predict the losses for
branch based asset products the next quarter
• The brief was to develop a Loss forecasting framework using 2 methods for every product and
develop a Cross product charge-off datamart
Methodology
Evaluated Different Approaches based on Built a user friendly excel interface

• All retail products were the product and data availability with simulation engine
considered for forecasting
• Seasonality and business
ramp-up adjustment provided
Decide forecast Building forecast Validations and
• Loss Lines - New Flow into Generating excel
methodology for model by different Cross Product
90 dpd, Stamped NPA, user Interface
Settlement losses,
each product approaches charge - offs
Repossession losses,
recoveries, provided for
business planning • Building forecasting model for each product
Incorporating a single customer
view to build cross product charge-
• Compare the output with a different off in the model & validating the
methodology output

Approach Methodology Description Strengths Weakness

Markov approach identifies the individual Optimal for 1 to 6 month predictions. Slow to pick changes in portfolio
state transitions contained within the quality.
• Markov Matrix was chosen aggregate flow of a net flow model. Was – Ideal for collection planning &
as the bank wanted to Markov is tables allow us to observe these estimating short-term revenues Degrades quickly after 6th
individual state transitions month, especially for growth
forecast the bucket-wise Chain portfolios
balances of both Non NPA
The Vintage model uses performance of Optimal for 9 to 18 month predictions Degrades after 18th month.
and NPA accounts and it accounts by grouping into cohorts for fast growing portfolios
lends itself well to retail Limited utility for large portfolios
It then uses statistical modeling to create Ideal for portfolio mix decisions, long- with few new accounts.
portfolios standard curves and seasonality indices . term planning and capacity planning.
Vintage
• Vintage based forecasting The Econometric model uses external Optimal for 18+ month directional Variances difficult to explain due
using regression was macroeconomic effects either national or feedback. to complexity. As accurate as
chosen as the 2nd method. regional and build correlations with internal forecasts it is based on.
delinquency and charge-offs Ideal for long term strategic planning.
Econometric
Business Impact &

2 different Cross product
Benefits Error rates sub- methods of
Vintage wise
charge-off
losses
5% for all forecasting datamart being
• Reduction in error rates forecasted as a
products. resulting in used for
across all products second method
HL/LAP – 6.8%. better generating
for validation
Benefits accuracy. quarterly risk

The model was used for the Annual
Vintage Based Forecast budgeting exercise for the current
Development period
chosen – mirroring Markov Financial year.
current portfolio
Product Forecasting method Errors
trends
Cards Exponential, Quadratic sample total error 0.2% ; MAPE: 3.1%
Suitable Transition states
designed – Clean/non Clean, Personal Loans Moving Average, Quadratic, cubic sample total error 1.0% ; MAPE: 2.4%
B-score bands Auto Loans Cubic sample total error 1% ; MAPE: 2.6%
Segments selected – Home Loans ARIMA modeling is chosen to capture Sample error 0.06% ; MAPE: 2.9%
vintage, new to Bank, and LAP seasonality and auto regressive nature of
this long tenured portfolio
Existing customer, Customer
category, Property type, etc
Linear models for curve predictions
Loan Level do not take care of seasonality,
default Multi- Quadratic and Cubic curve equations
probabilities linear capture the accelerations
(Binomial models
Logit/ Logit/PH models at loan level
Markov Matrix Created Proportional become complicated and have
hazards) MOB wise data issues
curve
predictions
Validations on Out of Loss Curves when modeled with
MOB mix up different month
time originations and seasonality
ARIMA, exponential, ARIMA models take care of trends,
Error rates sub- 5% for all logarithmic, cubic & seasonality, causality and
products. quadratic functions dependencies on origination
HL/LAP – 6.8% chosen depending on the characteristics
product behavior

Equifax helped A Major UAE Bank understand the
behavioural aspects of Attriting Customers
Equifax helped A Major UAE Bank understand the behavioural aspects of Attriting
Client Profile Customers
• Client bank is a publicly owned bank headquartered in Abu Dhabi, UAE
Major UAE Bank • It is one of the fastest growing banks in the UAE
Abu Dhabi UAE • The bank offers a variety of financial services in corporate banking, treasury &
Banking
investments, merchant banking and retail banking services
Case
• Banks are looking to prevent Attrition of customers from their Credit Card portfolios,
• Scenario clearly understanding that cost of retention < cost of acquisition
• Problem Statement • Overall Annualized Voluntary Attrition rate for the Credit Card portfolio was 9%
• Benefits • Developing a Customer Attrition scorecard to quantify the likelihood of attrition of a
customer
Target Operational
specific Understandi Cost
Prevention customer ng of Root Efficiency
of Closures segments for through Benefits
Causes of
retention Attrition optimized
efforts channel
strategy

Data • Created derived variables to capture the behaviour of customers

Methodology & Approach Preparation/ for 1, 3 and 6 months before the observation month
• Logistic Regression – Sampling
Development • Developed stepwise regression to determine the significant variables
• Exclusions: <6 MOB, Modelling and their relationship with Customer attrition
Non BNK and SME • Developed a Customer Attrition Scorecard
customers
• Validated the model against various statistics and performed in-time
Validation
and out of time validation
• Vintage, utilization, spend activity, interest and credit limit attributes
Recommendations determine the customer churn
• Higher Value
proposition for high
yielding customers
• Majority of the Strong retention
Increase engagement Align Value proposition
predictive variables program
are indicative of
reduced engagement Identify drivers of
Induce spend behavior Focus energies and
Dissatisfaction, Align value Investment on those most
Ex: Targeted spend campaigns
proposition to drive customer
: Reactivation campaign likely to attrite
satisfaction

Churn Score
Medi Very
Low High
Results um High
22. 17. 17. 19.
Low
Revenue Score
• Combination of 46% 18% 68% 01% Very high High Medium
Churn Score and focus focus focus
8.3 2.0 1.4 0.6
Med
Revenue Score used (3.3%) (1.6%) (2.1%)
ium
to prioritize the 9% 9% 0% 5% Memb Memb Memb
target ers ers ers
5.2 1.0 0.6 0.2
• Focusing on Very high
Hig
9% 7% 4% 5%
h
focus (1.2%
members) customers 2.9 0.5 0.2 0.1
Ver
Hig
alone could bring 6 2% 7% 9% 2%

h
y
million AED on
annual basis Score Gain Chart - Observed Attrition Rate is ~116% higher in first
Hosmer and Lemeshow Goodness-of-Fit Test
3 deciles than portfolio average
Cumulative Captur... 7.0%
• For each behavior 120% H-L plot shows the
Customer Attrition Rate

100% 6.0%
segment, we have 5.0% attriters are sloped
identified possible high 80% correctly
4.0%
% Capture Rate
level marketing 60% Top 3 deciles based on the

3.0%
strategies that address 40% captures 65% predicted values
2.0%
the key customer 20% of attriters 1.0%
opportunities 0% 0.0%
10 20 30 40 50 60 70 80 90 100 1 2 3 4 5 6 7 8 9 10
% % % % % % % % % %
Actual Predicted
Deciles

Major UAE bank strengthened its predictive capabilities
with Equifax’s Customer Revenue Forecast Model
Major UAE Bank strengthened its predictive capabilities with Nettpositive’s Customer Revenue
Forecast Model
Client Profile • First Gulf Bank (FGB) is a publicly owned bank headquartered in Abu Dhabi, UAE
Major UAE Bank
• FGB is one of the fastest growing banks in the UAE
Abu Dhabi UAE • The bank offers a variety of financial services in corporate banking, treasury &
Banking investments, merchant banking and retail banking services
• In the Intensely competitive credit card markets of UAE, Major Banks are concentrating
their efforts towards predicting revenues at customer level for better strategizing
Case • 27% of customers contribute ~70% of revenue per year
• Scenario • Developing a Customer Revenue Forecast Model for credit card portfolio to understand
• Problem Statement the drivers at customer level
• Benefits
Better
Custom
Attritio
er
Better Uplift low n
Specific
revenue Preven
understan marketi
Generating tion
ding of ng
customers Measur
customer actions
es
Benefits

Data • Created derived variables to capture the behaviour of customers

Preparatio for 1, 3 and 6 months before the observation month
n
Methodology & Approach
• Developed multi-linear regression model to determine
• Multi - Linear Modelling the significant variables and their relationship to future revenue
Regression – • Developed a Customer Revenue Forecast Model
Development • Assigned appropriate bucket to predicted revenue
• Exclusions: <6 MOB
Validation
• Validated the model against various statistics and performed in in-time
and out of time validation
Business Impact
Invest on high value Consider interventions Helps understand the Crossing the revenue
customers to retain like upgrade, credit limit revenue contribution and customer
• Better strategizing them and sustain increase etc. to retain of customer. Use the behaviour
Capability high value customers and segmentation to segmentation,
• Uplift/ Maintain maximize the revenue prioritize customer
potential marketing activities
Revenue per customer
Focused Align Value Customer
Investments Targeted offers
Proposition Profiling

Results
4 49% Customer distribution by revenue buckets
• Revenue Score crossed
with Product
propensity used to 3
Actual Revenue
formulate various 37% of customers contribute to 80%
% Customers
communication of revenue
Strategies 2 14%
•
9% 7%
Combination of 6% 5% 4% 3% 2% 2%
Balance Attrition Score
and Revenue Score, 1
1 2 3 4 5 6 7 8 9 10
Churn Score and
Revenue Score used to Product Propensity
0
prioritize the targets 1 Predicted
2 Revenue3 4 Mediu
Low High
m
Key characteristics Illustrations: Communication Strategy
Revenue Score
• Fees – Interest fee, - Lower price to increase penetration
Low
Insurance fee, Late
fees, Over limit fee, - Less intrusive channel to communicate Ex: Email /
forex fees SMS
- Test higher price to maximize revenue
Mediu
• Utilization
• Payment rate for last 6
m
months
- Test lower price with economical channel
• Utility bill payer
High
• Cash transactions
• Credit Limit
• Retail activity in last 6
months

Sourcing strategy based on credit risk predictions for major
NBFC
Case
• Client is India’s largest consumer durables financer Top 3 deciles capture
58% of risky customers
• Large sourcing pool of 150k+ customers every 100%
90%
month
80%
• Existing risk policy is very old Increasing P(bad)
70%
• Sourcing patterns and attributes have changed 60%
drastically, hence application scorecard is required 50%
40%
Objective 30%
20%
An Application Scorecard for consumer durable with 10%
variables captured at the time of login / application, 0%
that better separates ‘Bad’ from ‘Good’ and 1 2 3 4 5 6 7 8 9 10
minimizes ‘False Positives’ to off-set potential Development Validation Out of time
‘Revenue Loss’ upon rejection with ‘Loss Saving’
Business impact
• Bad rate reduced by 30% while increasing the K.S. Capture rate
3 decile
approval rate by 10%
• Incremental Revenue of 4% Development 27.3% 58%
• The bank now operates at a desired level of risk
In Time Val 27.8% 57%
based on its risk appetite
Out Time Val 27.0% 57%

Optimizing approvals and bad rate results in 4% increased
revenues
Profitability @ ‘x’ points cut off
Present Incremental
Gross revenue Processing fees Credit losses
Revenue Revenue
Accepted count at Count at cut off* Bad count at cut off*

cut off* Average Processing Average ticket size*
Average ticket size* fees (LGD X EAD)
(gross subvention
revenue – COF)
Cut off of 530 will have maximum revenue uplift compared
% Revenue Increase to as is scenario. Increases Approval rate by 10% and
decreases bad rate by 30%
20.00%
0.00%
% Revenue Increment
-20.00%
-40.00%
-60.00%
-80.00%
-100.00%
310
330
370
390
410
430
450
470
490
510
530
550
570
590
610
630
690
710
730
750
770
790
810
830
850
870
890
350
650
670
App Score
Bureau Attributes provided 22% lift for Credit
Originations Risk
Bureau variables provided
22% 6.7% lift in KS (22%)

Bad Rates by Risk Decile for Application Scorecard
10.00%
9.00%
8.00%
Key Indicators
7.00% Bureau Advantage
• 60+ on any trade line in last 12 months 1. Better spread of risk between
% Bad Rate
6.00%
• Total Credit Cards disbursed lower and higher risk deciles
5.00% 2. Monotonic slopping of risk
• Age on bureau
4.00%
• Home Loan customer vs Non Home Loan
3.00%
Results 2.00%
1.00%
• Cut-off strategy resulted in 30% lower bad rate
while 10% increase in Approval rate and 4% 0.00%
1 2 3 4 5 6 7 8 9 10
incremental revenue
Bureau Non Bureau
Other Benefits Risk Decile
• Risk based pricing Key Metrics Non Bureau Bureau
• Policy driven sourcing; and KS 27.30% 33.90%
• Quicker underwriting Gini 0.36 0.46

Capture rate in Top 2 decile 42% 49%
Capture rate in Top 3 decile 56% 63%

Case Study - Merchant Acquisition Business
Helped Axis Bank design its Merchant Acquisition Business Model –
Sales Tool & Transfer Pricing Algorithm
Axis Bank is one the fastest growing and largest private sector bank in India
The bank offers a variety of financial services in corporate/wholesale banking, treasury & investments, and retail
banking services
The bank is one of the leading players in the Merchant Acquiring Business(MAB) and has an installed base of more
than 2,00,000 POS terminals and 1,64,000 merchant relationships
Domestic card payments are reporting explosive growth with RBI asking banks to issue debit cards to all account
holders and increase their network of merchants accepting the cards
Key Requirements: Build a framework for creating a profitability measure across the merchant base of client bank
• Estimating income, cost and transfer pricing between CASA and MAB
• Design and build the analytical architecture to support the profitability framework
• Reconciliation and validation of the results
• Ongoing support for tweaking and maintenance of the algorithms and Architecture
Sales tool for

Merchant Transfer
Optimum
Dashboard Level Pricing
Merchant
Profitability Algorithm
Discount Rate

Approach
Understanding of various streams of business and requirements from the business
Dashboard framework set up
Framework Profitability and TP modules framed with dummy data
Design
Sales tool set up with dummy data
Sanity checks on data and iterative clarifications from the respective teams
Data
Extraction Suggestions on data structure/format
Filling the gap in understanding the operational aspects of linkages among different businesses in
MAB (IPG, EMI, DCC, FUEL etc)
Algorithm Building & Dashboard created under management review

Validation
Profitability algorithm and transfer pricing logic developed with existing data
Sales tool developed using clustering techniques
Top Merchant Categories(By Volumes) Composition of Transactions in Mar‘ XX (POS)

100%
ation
90%
Il lustr n
80% tratio
70% Illus Medical
60%
50%
40% Dept Stores
Percentiles
30% Hotels
20%
10% Top 80%
0%
es ls al rt el el s t st
es ry nt
s cs re us ods n g i c es ts en es es s ts ry to n ls s
St
o r Sto r
Ho
te
el
le
ed
ic
ns
po Fu Trav ra ro
ni to eo
Go n i s
hi rv en ar
n m e Sh Ai r
l in
n.
In op
Sh ro d
u c o n e Mo
ca
ti o
en
ta
er
vi
ce
Jewellery
Dep t o th
Cl
Je
w M T ra
est
au
lE e
ct
Re
tai
l S l l an
c e h er
Fu r
to
Se
P
m
ay rtai
te Ti
m
Fi
G i ft P S ta
ti
E du ar R vt S Cloth Stores
R is at e Au ll od d C
Go
M Le m Bi En Fo s An
Ho An
d
ok
es B o
on
Ph
i le
ob
M

To measure & understand Profitability rolled up from
Account level to Merchant Level
Profitability Waterfall
250
• 95% + Acquiring merchants have
200 bundled offering (CA & POS
terminal)
150 • NII on CA balances form a big part
of Acquiring business
100 • POS product and CA to be made
profitable on a standalone basis
50
on each account basis
0
NII Net MDR Non MDR MDR + Non Network + Operating
MDR OPEX Profit
Profitability = NII on CA Balances + [MDR revenue + Fees – interchange- network fees –staff/OPEX costs]
Merchant X showing an Merchant Y although

overall unprofitable situation n unprofitable on MAB
tratio
n tratio
Illus on the bundled offering Illus product, shows overall
150 profitability
Merchant X 800 Merchant Y
100 Net TRV (65) bps 600 Net TRV 592 bps
50
400
-
200
(50) -
(100) (200)
(150) (400)
MDR fee
Setup fee
Network fee
Interchange
MDR fee
Setup fee
Interchange
Network fee
OFSA
Staff Cost
OFSA
Term cost
Profit
Staff Cost
Term cost
Profit

Standalone profitability of MAB is integral to growth of
bundled offerings post segregation of MAB & CA into
different SBU’s
+
Bank TRV
-
Each merchant will segmented based on MAB operating profit (Including all fees i.e.
+ TP not Review MDR & Non MDR fees) and bank level TRV
Needed
Merchants whose TRV is positive i.e. overall profitability basis
all relationships with the bank(CA, SA, POS terminal, etc.)
TP but unprofitable on MAB product is eligible for TP
Profitability
- Review
Eligible
MAB
Merchant Monthly Benchmark

TP Amount Deal MDR
Transaction Volume MDR
Benchmark
Interchange Network Fee OPEX
MDR*
Players impacted by Transfer pricing MAB Business Banking

• MAB Credit TP Debit TP
• TP Payer Product (Ex– Current Account) Amount Amount
• Branches through which product is sourced and serviced
Finance and Accounts created a dummy product for Dummy
Operationalizing Transfer pricing Product

Standalone profitability of MAB is integral to growth of
bundled offerings post segregation of MAB & CA into
different SBU’s Min Deal
MDR Calculator
MDR
Input from Sales team - Sales person needs to input Input 1 Merchant Category
• Branch ID of POS issuing branch
• Merchant Category code
• Expected transaction volumes, CA Balance and ticket size of transactions
(the model also suggests these numbers)
Input 2 Geography
• Possible MDR offerings in debit and credit card
Input 3 Segment Type i.e.

IPG/Retail/Platinum
Modeled components
• NII is indirectly got through the CA balance/Transaction ratio
Input 4 NII from Estimated CA balances
• Clustering technique is used to arrive at the optimum
clusters defining CA balance/Transaction ratio
• Interchanges differ for type of transactions viz.

VISA/MC/INT, DB/CC, PREM/N.PREM., etc. Input 5 Suggested Interchange & Network
• To arrive at possible splits within these clustering technique fee
is used

Case Study – Net Positive created a Customer Value
Model for a Axis Bank to enable more targeted marketing
strategies
To develop a Customer Value model for the entire Savings account base, across retail
banking products by considering all cross product holdings
To create a CVM Score for more targeted marketing strategies and better customer
service
Customer Value Score created- 5 Bands- Each Band having different value
characteristics
Customer Profiling of each CVS band done to understand drivers of value
Specific Reason codes created for every customer to help Branch and Customer
Service personnel migrate customers to higher Value bands
Specific Channel strategy recommended for different customer segments to migrate
them into higher CVS
Fee Waiver Product cross Branch Driving Routing

Policy set basis sell strategy Performance Customer customer
CVS devised- to measurement Service Actions through most
increase cost effective
products per channels
customer

Case Study - CLTV
Approach Assets Liabilities
• Profitability calculated using average • 6 months historical data used
month financial information, average Interest Income • Interest expenses computed using treasury bid/offer Interest Income
month driver information etc. rates
• Profitability per account calculated Interest Expense • Servicing costs considered as costs required to service Interest Expense
• Group of products by customer an account on ongoing basis
identified • Bad debts computed from probability of defaults,
Servicing Costs exposures and recovery rates of individual products Transaction Costs
• Customers profitability per product
• One – time fee amortized over 12 months
calculated
• Fee commissions spread over 12 months
Bad Debts Fee
or actuarial life
Fee-based Products
Customer value determination Sourcing Commissions
process
Components of profitability
calculation
CVS Score implemented in the

Customer eye front end to drive
Customer Service Actions
5 CVS Scores
CVS score based on absolute
customer profits

The entire CVM model was integrated into the
Application architecture of the bank

Customer Exposure Management for unsecured line
A leading NBFC was running a risk of over leveraging the customers beyond his capacity and want to arrive
at a methodology to compute optimal credit exposure limit for unsecured line for customers sourced at any
given stage of customer lifecycle
• At present the exposure/multiplier assigned by the NBFC is determined in isolation and in parallel and hence a better
methodology is required have a holistic view at customer level basis ability and risk
Objectives
• To arrive at CEM framework with the combination of Imputed Income and risk bands
• To align exposure/ multiplier linearly with risk segments
• To arrive at the methodology to compute income for the customers sourced and define ability to repay based on
the current cross holdings of the customers
Incremental
Single point Exposure business and
view on
Customer’s
assignment Loss reduction, Benefits
basis Risk by taking
Ability to Pay optimal credit
exposure limit

Approach We created risk
segments to arrive at
Illustration - Exposure Management Framework
• Bad rate segmentation optimal exposure
• Multiplier framework
• Bureau adjustment factor
• Un-secured exposure
Selective with enhanced
assignment Source aggressively underwriting
High
• Secured exposure limit (Cap at max ability to
basis un-secured exposure (Cap at min ability to pay)
pay)
limit
Ability to pay
Adjustment metrics Take controlled exposure Exclude

(Cap at max ability to
pay)
Bureau adjustment factor
 Thin secured
Low
 Thick secured
 Thin un-secured
 Thin un-secured
 No bureau/ no hit Low Risk Profile High
• Total exposure for a customer can be as high as disposable income

• Total Exposure = Disposable Income x n
Where, 0 < n <= 1 and n depends on risk appetite of the business

Segment Method
Methodology
& Approach
• Imputation Methodology Imputation Method
using DBR using DBR/FOIR
• Logistic Regression :
Hybrid model using
Income Estimation Bureau Hit Customers
bureau Variables and
demographics Linear Regression Model
using bureau and
demographic variables
Recommendations Approach
Regression Model
• The EMI exposure on
Imputation Method
Secured / Unsecured • Correlation, Bi- variates, variable cluster, VIF to understand the
loans was the clear • Calculated EMI using Loan tenure and significant bureau variables
indicator of income IRR assumptions across varieties of • Develop regression model using select demographics and significant
• Customer profile played an loans bureau variables
important role in income • Used max EMI exposure in last 10 • Tested for significance across variables and at different time period
years, to impute EMI servicing
capability
• Estimated income based on DBR
assumptions Validation
• Compounded income by 5% YOY to
estimate current income • Model is validated using boot strapping method to check the stability
and predictive power
• Model stability remained constant across the samples

No Bureau Hit Model
Results Estimated income band
• Imputation method <=25k 25-50k 50k-1Lac 1-2Lac >2Lac Grand Total
Actual income
successfully captures 58% <=25k 0.0% 0.1% 0.0% 0.0% 0.0% 0.1%
of the income in same
band 25-50k 0.4% 5.7% 5.9% 0.3% 0.0% 12.3%
• Regression Model 50k-1Lac 0.3% 12.8% 41.6% 7.4% 0.5% 62.6%
successfully captures 63% 1-2Lac 0.0% 1.6% 9.5% 9.4% 2.0% 22.5%
of the income in same
band >2Lac 0.0% 0.1% 0.4% 0.8% 1.2% 2.5%
Grand Total 0.8% 20.2% 57.5% 17.8% 3.7% 100.0%
The prediction power of

Model Efficiency regression model remained Model Efficiency
58% on non Bureau significant 63% on Bureau Hit
Hit
Bureau Hit Model Estimated income band

<=25k 25-50k 50k-1Lac 1-2Lac >2Lac Grand Total
<=25k 0% 1% 2% 0% 0% 3%
1% 7% 9% 0% 0% 17%
Actual income
25-50k
50k-1Lac 1% 7% 44% 8% 1% 59%
1-2Lac 0% 0% 8% 10% 1% 18%
>2Lac 0% 0% 0% 1% 1% 2%
Grand Total 1% 14% 63% 19% 2% 100%

Proposed framework will result in
Change in Exposure additional business of 1,563 Cr Change in Rs Bad Rate (60+)
and profits of 156 Cr**
21,968 Cr
7.6%
1.34%
9.7%
20,406 Cr Reduction in losses will result

in benefits of Rs 28 Cr 1.21%
Existing Exposure Proposed Exposure

Existing Exposure Proposed Exposure
Scenarios
At 10% Conversion with 100% At 20% Conversion with 100% At 10% Conversion with 50% At 20% Conversion with 50%
Exposure Exposure Exposure Exposure
Benefit Benefit Benefit Benefit
18 Cr 37 Cr 9 Cr 18 Cr
Assumptions :
**NIM of 8% per annum is considered for calculating revenue
Monthly snapshot was considered for benefit calculation

Salaried PL propensity model on CD base
A leading NBFC increases Personal Loan disbursals with help from Nettpositive Banking Analytical Services
• The client was looking to increase PL disbursals through low - cost cross-sell channel
• X-sell of PL was based on rules like age, occupation, city, occupation, income segment which do not factor available market
information from Bureau or the need for PL
• Disbursals through cross-sell channel currently form 17% of total disbursals
• Opportunity existed for optimal conversion rate through right targeting
• Objectives
o A propensity scorecard which predicts customers who are likely to make a Personal Loan enquiry
o Enable Proactive measures directed at right customers for higher conversion rate and increase in disbursals
Expected Cost Savings

Lift of 2X over incremental associated with
random calling disbursals of INR disbursals by
Benefits
180 Cr annually external agencies

• Created in-time and out of time validation samples on Personal Loan

Methodology & Data
eligible base
Approach Preparation/
Sampling
• Implemented stepwise regression to ascertain the significant variables and
• Logistic Regression : PL
Eligible Customers their relationship with Personal Loan Enquirers
Modelling • Developed a Propensity Scorecard
• Validated the model against various statistics and performed in in-time and
Validation out of time validation
Recommendations
• Majority of the
predictive variables Test Differential Improve target selection Attract less interested
are indicative of credit Pricing precision customers
hungriness and PL as
a habit Retaining pricing or offer
Concentrating cross-selling Formulating teaser rates to
higher price
efforts capture less likely
for customers with higher
on relevant customers customers
likelihoods

Results Personal Loan Closed in Last 3 Months Personal Loan Disbursed Amount in last 24
14% 100% 20% Months 100%
• Model successfully
12% 80%
captures ~65% of Login Rate 15% 80%
10%
Response Rate
Response Rate
PL inquirers in top 60% 60%
% of Total
% of Total
8%
10%
30% of population. 6% 40% % of Total 40%
• Targeting top 30% 4% 5%
20% 20%
of customers will be 2%
0% 0% 0% 0%
able to attract ~65% No-Hit 0 >0 No-Hit 0 <1 lakh >1 lakh
of total PL takers
Bureau variables
KS Statistic Play a significant role Gini Co-efficient
33 in predicting PL takers .40
Key Indicators Credit Card Mild Delinquency in recent Score Gain Chart
14% months 100% 100%
12% % ot Total
Capture Rate
• Recent PL Closure 80% 80%
10%
Response Rate
• Mild delinquency on Credit 60% 60%

% of Total
8% Top 2 decile
Cards 6% 40% 40%
captures 50% of
• Home Loan Closure in last 3 4%
20% 20% PL Takers
2%
months 0%
0% 0%
• PL Disbursed in last 2 years No-Hit 0 >0
1 2 3 4 5 6 7 8 9 10

Bureau Attributes have provided significant lift in cross sell
models
Bureau variables provided Gain Chart for Personal Loan Propensity Model
2X 2 X lift over random calling

for Personal loan propensity
model
100%
90%
80%
% Cumulative Population
Key Indicators 70%
• Recent PL Closure 60%
• Mild delinquency on Credit Cards 50%
• Home Loan Closure in last 3 months 40% Top 2 decile captures 50% of PL
• PL Disbursed in last 2 years Takers
30%
20%
Results
10%
• Targeting 30% of population will capture ~65% of
0%
personal loan takers 1 2 3 4 5 6 7 8 9 10
Other Usage Response Decile

• Test differential pricing
• Improve target selection precision
• Offer teaser rates to capture less likely customers

Helped Major Indian Private bank to analyze campaign
performance
A leading private indian bank runs more than 160 campaigns across assets and liabilities book
• Helped bank analyse performance of campaigns across assets and liabilities

• Resulted in fine tuning of over 35 campaigns and resource re-allocation to over 40 campaigns
• Now partnered with bank to manage campaign management in managed service mode with a dedicated team of 6

performance
Analysis of CLI campaign

performance
Publish regular dashboard to management to provide key KPIs
Program Target Customer Base Campaign Target Base Test Control Lift Incremental Business Incremental
Conversion Conversion Value net Income
Dormancy Last 4 month spend Email/SMS 21,763 5.1% 4.7% Activity - 8% INR 19.9L spends Profit - 25K
Campaign inactive customers ROI- 24%
Targeted Spend
Campaign Debit Card- Active Email/SMS 6,01,160 9.8% 7.2% Activity -0.0018% INR 86L spends INR 3.9 lacs
Targeted Spend Profit - 26L

Campaign Debit Card- Inactive Email/SMS 3,05,126 3.9% 2.5% Activity - 0.45% INR 3.9L spends ROI- 163%
Targeted Spend Credit Card - Active Email/SMS 2,19,117 16.9% 16.9% Activity - 0.86% INR 6.38 cr spends Profit - 28L
Campaign ROI- 198%
Targeted Spend Credit Card - Inactive Email/SMS 92,199 4.9% 10.8% Activity - 1.24% INR 13.5L spends Loss - 1.35L
Campaign ROI- (60%)

THANK YOU

Credit Card Industry Best Practices

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Credit Card Industry Best Practices

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CREDIT CARD INDUSTRY

Confidential and Proprietary

Product Profitability view Per Account Profitability NPV (Predictive)

Basic Segmentation Ex: Rule base segmentation Behavioural Segmentation

Risk based criterion Use of propensity models Risk, profitability and

Risk scorecards for Sophisticated risk

Confidential and Proprietary 3

Generalized campaigns Segment level campaigns, CVM, Real time, trigger

No or Generic bureau Bureau based analytics, Extensive usage of bureau

Random treatment, Segmental treatment,

 How do I accurately assess the risk in my Risk Based Application

Confidential and Proprietary 5

Prevent attrition and

Identify high Usage and engagement

• Mail-base • Spend Inducing • Behavioral Scoring • X-Sell • Line Increase

Confidential and Proprietary 6

Campaign Management Program

Fee Growth &

Cash Back Re-pricing E Statement Reg

OL padding / Auth EMI / Payment

Self aware Balance Builders; 4% Least engaged; 8%

Confidential and Proprietary 8

SAS Server Equifax Team

Bureau Raw Variables Trusted &Data

Confidential and Proprietary

ODS and Embed analytics Channel

Data Extraction, Streamlining Automation of

BI Technology Agnostic – MS SharePoint, Cognos,

Confidential and Proprietary 10

Service Request Data

Competitors Data Credit Bureau Data

Confidential and Proprietary 11

Confidential and Proprietary 12

 Adhoc and Complex

 Monthly diagnostic  Early response tracking

Confidential and Proprietary

Improve Typical business challenges Related analytics solutions

Confidential and Proprietary

response approval rates, fulfillment tracking • Short term opportunities

spend, fee income, contact cost • Test roll outs

• Provide guidance on components of investments

Confidential and Proprietary

| Confidential and Proprietary

Mon Tue Wed Thu Fri Sat Sun Mon

Opportunity EMI CARD – graduate from post-facto to Point-Of-Sale

| Confidential and Proprietary

Confidential and Proprietary 18

Confidential and Proprietary

| Confidential and Proprietary

Portfolio 2005 2006 2007

Retail balance per card By Vintage and MOB

2005 2006 2007

| Confidential and Proprietary

2005 2006 2007

Predicted Values utilizing 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16

| Confidential and Proprietary

Cummulative Three Year Figures Portfolio

P&L Lines Non Interest Income/Outstanding Balance 8.73% 5.80% 2.60%

Total Costs 673,139 101,822 89,930 864,892

Net Profit -354,749 424,412 142,433 212,096

| Confidential and Proprietary

Confidential and Proprietary 24

Identify segments of population which exhibit significant