Developing Unit Economics tool for a LatAm Fintech
Background: A Brazilian rental platform that takes on renters’ credit risk engaged AQN to assist in building a gameable Unit Economics tool to assist them in understanding the impacts of expanding their credit box
Outcome: AQN's Unit Economics tool highlighted the opportunity for the client to improve profitability by expanding the credit box; AQN estimated that a ~10% increase in volume would improve profitability by ~50%
AQN’s Approach:
Analyzed historical losses to determine lifetime loss rates by customer segments
Built gameable Unit Economics tool to better understand tradeoffs of increasing approval rates and volumes
Ex: higher volume → higher risk / losses, fixed cost dilution, etc.
Recommended differential testing strategy to better understand incremental risk in different segments’ expansion populations
Identified that benefits of expanding the credit box outweigh the potential risks: fixed cost dilution > incremental losses
Key Results:
