Assessment of a New Data Product to Leverage in Credit Policy for a Regional Bank
Background: AQN was hired to assess the value of a new product being rolled out by Transunion and provide policy recommendations for the bank if they were to acquire the data product
Outcome: The policy recommendations AQN identified from the dataset are expected to generate an additional $5M in incremental pre-tax income and reduce losses by $36MM
AQN’s Approach:
The new data focused on trended credit bureau data and offered to provide our client with retroscores at a low cost
AQN compiled the necessary data for segmentation and performance assessment on the planned vintages for the retroscores and provided them to the bureau
AQN assessed the value of the dataset for new acquisitions credit policy once the bureau returned the appended dataset
AQN leveraged univariate and multivariate analysis to identify the most powerful variables for segmentation
Key Results:
AQN used the alternative data to find a small pocket of originations with losses >4x the overall population that was highly unprofitable
AQN worked with the client and bureau to append updated performance and add additional segmentation to conduct future analysis