Installment Loan Firm Price and Underwriting Optimization
Background: Client hired AQN to review their risk model and suggest improvements including bringing in alternative data sources
Outcome: AQN realigned with the client on non value-creative asks and proceeded to increase their profit per customer by 86% using insight-driven segmentation to make pricing & underwriting tweaks to their strategy
AQN’s Approach:
De-averaged their loan portfolio into 30 segments (from 5) based on significant differences in segment performance
Built an NPV model to ground profitability for each segment
Identified pricing and underwriting changes to maximize NPV with less than 150 bps impact to approval rates
Prosposed strategy changes requiring minimal incremental investments and were implementable within two months
Key Results:
