Axtria Designed Acquisition And Initial Line Assignment Strategy For A Leading US Credit Card Issuer

Situation

Client was experiencing high delinquency rates on its New to Bank Credit Card bookings. 

Approach

Axtria built a predictive model to modify the acquisition strategy and create an initial line assignment strategy.

• Data Collection
  • Collected approved accounts data for last 24 Months
  • Collected Bureau data
  • Collected Application data
  • Created data dictionary to identify missing rates and reason for missing values
  • Outlier identification

• Data Collection
  • Created definition of default as 6M 60 DPD rate
  • Independent variable creation: bureau score, bureau variables, application variables
  • Missing value imputation
  • Outlier treatment
  • Variable reduction using various techniques:
    − CART
    − One step logistic
    − Bivariate plots

• Segmentation
  • Created segmentation to identify various segments of accounts
  • Identification of segments:
     − Red: Default  rate>20%
     − Amber: Default rate 10-20%
     − Green: Default rate<5%
    
  • Computed 12M EBIT for each segment thus created
  • Swap out sets identified with 12M EBIT as negative
  • Validation of segmentation on OOT samples

• Line Assignment Strategy
  • Average 12 M Utilization look up tables created by credit limit
  • For each segment sensitivity of EBIT computed for various combinations of credit limit – utilization

Result

• Created as segmentation for identifying swap out sets
• Positive EBIT impact on Swap Out
• Created a line assignment strategy
• New Strategy resulted in $15 Mn savings in NCL