Bringing your portfolios strategy design, implementation, execution and monitoring to your fingertips
Introduction
We previously touched on Why is end-to-end decisioning so important? To build on that thread, we pickup on portfolio improvements.
In today’s world, it is critical for lenders to design the right customer journeys. Profitable growth relies on an organisation’s ability to repeatedly make the correct decisions. Also, profitability hinges on developing and delivering better credit risk management and improvements in portfolio performance. What’s more, this must be delivered against a backdrop of rapidly evolving markets, economic volatility, regulatory changes, and increased competition.
This translates into improving performance by adapting to change. In addition, gleaning useful insights from data, and implementing appropriate responses and challenger strategies based on those insights. As the pace of change has become increasingly rapid, the response to change must adapt and be delivered equally rapidly.
Increasingly, difficulties in deploying strategies into operations, have a material impact on the bottom line and the ultimate customer experience. Incompatible software, varying data formats and naming conventions as well as a lack of integration across systems means that the mechanics of analytics, strategy design and deployment consume precious resources.
With return on investment (ROI) top of mind, organisations need to be able to eliminate the mechanics of implementation, freeing up limited resources to focus on the quality and bottom line impact of their decisions. Lenders need a way to streamline the design, implementation, operationalisation and measurement of decisioning strategies and scoring models so that they can learn from the results and implement further improvements.
Not only must future processes become faster, more flexible and dynamic, and eliminating bottlenecks along the way; they must also be more cost-effective and enable greater collaboration across different business units and deliver increased rewards to the organisation.
The importance of a Credit Risk Strategy
A well thought through and implemented credit risk strategy will simultaneously deliver increased revenue and reduced bad debt, as more credit is issued to the right customers. It will deliver increased operational efficiencies, ensuring that the organisation provides an improved customer experience, whilst effectively managing operational costs.
When implemented using a flexible and agile decisioning system, a robust credit risk strategy ensures that the organisation can quickly and effectively respond to rapidly changing market conditions. It should do all of this whilst ensuring that the lender is fully compliant with internal policies and regulatory legislation.
As the pace of change continues to accelerate, customers demand a seamless, frictionless experience, and the lender’s stakeholders expect management to deliver more whilst reducing costs. Organisations must be able to react effectively to market dynamics and must continue to meet their compliance and regulatory obligations.
This is where the ability to simulate and A/B test multiple credit risk strategies is critical. A simulation (what-if analysis) enables the business user to experiment with credit risk strategy changes and estimate the likely impact of implementation across a range of metrics including approval rates, bad debts and operations.
A/B testing enables the business user to implement a challenger strategy on a representative sample of records and determine whether it not only delivers the anticipated benefits, but whether it does a better job than the champion strategy did. If all goes as anticipated and the benefits are realised, the challenger strategy is crowned the new champion and rolled out across the portfolio. A new challenger test is then created, ensuring continuous improvements across the credit risk life cycle are delivered.
Strategy Design, Execution and Reporting with ADEPT Decisions
ADEPT Decisions brings strategy design and execution together in a single platform, connecting analytics and operations for all customer decisions.
The use of common data definitions throughout strategy development, execution and monitoring means that decisioning cycles progress more efficiently, and momentum is built and maintained when data and decisioning elements can be developed and used across any strategy.
ADEPT Decisions helps companies make the right customer decisions in fast-changing and dynamic environments. It is a module-based platform enabling strategy design and execution, including a wealth of capabilities for credit risk decisioning and operationalisation.
ADEPT Decisions Core Components and Capabilities
ADEPT Decisions offers decisioning software as a service, providing a true multi-tenant solution where subscriber data is stored in separate silos.
Decisioning modules are fully client configurable, providing maximum flexibility for the business. ADEPT Decisions uses best practice industry standards in data integration and security.
There are numerous benefits to a SaaS module-based platform for your portfolios such as ADEPT Decisions:
- Faster ROI through quicker, lower-cost integrations and infrastructure costs.
- Increased business performance, driven by decisions made leveraging greater insight into customer risk and reward trade-offs.
- Performance improvements to the bottom-line by being able to identify strategy elements that need enhancement.
- Enables data scientists and analysts to seamlessly implement new models without the requirement of scarce IT resources, putting the users in the driving seat.’
- Reduces reliance on IT and analysts by ensuring that business users have the tools for decision strategy design and deployment at their fingertips.
- Increases flexibility for subscribers so that they have the decisioning they need by combining the necessary modules, and adding increased functionality as required.
Design Time is the interface where users design their customer credit risk life cycle decisioning, including strategy exclusion rules, implementation of scorecards and set-up of strategy trees and execution plans.
- Strategy Rules can be selected from a preconfigured Rule Library, or users can design bespoke decisioning rules.
- Scorecards and Predictive Models can be integrated directly into ADEPT Decisions:
- Traditional scorecards for portfolios can be captured directly into the scorecard editor
- Simpler Machine Learning Models, such as Trees or Logistic Regression Models can be captured directly into the Scorecard Function Editor, whilst more advanced Machine Learning and Deep Learning Models can be accessed via an external scoring endpoint. This enables organisations to consume a wide variety of model types.
- The Dashboard highlights Key Performance Indicators and has drill down capabilities meaning that users can understand Strategy KPIs by Period or Portfolio.
- A Common Data Repository holds all data elements that are used within strategies, and strategy component outputs can be used as inputs into subsequent strategy component steps.
- Dynamic Strategy-driven Standard Reports are available to business users. By selecting the period, strategy and portfolio(s), users can monitor their strategies without having to involve limited IT resources or rely on analysts extracting and merging data to create the necessary reports.
Strategy decisions and captured outcomes are executed through the various runtimes. As both Design Time and Runtime share a platform, deploying strategies to production is fast and simple. Runtime executes strategies, delivering decisions and actionable outputs to operational systems via APIs.
About the Author
Stephen John Leonard is the founder of ADEPT Decisions and has held a wide range of roles in the banking and credit risk industry since 1985.
About ADEPT Decisions
We disrupt the status quo in the lending industry by providing lenders with customer decisioning, credit risk consulting and advanced analytics to level the playing field, promote financial inclusion and support a new generation of financial products.
