Background
We helped Chase turn negative ROA portfolios into profitable ones. After aggressive portfolio purchases, Chase had several negative earning portfolios.
The work involved focused on:
- Identifying profitable vs. unprofitable customers
- Reducing unprofitable accounts by best-fitting terms and improving collections
- Building profitable accounts via targeted marketing & offers to a segment of one
Challenge
- Quickly build positive earnings
- Remediate underlying risk issues
- Create product value to attract and retain best customers
- Encourage desirable customer behavior with a scalable product strategy
Solution
- Performed customer-level assessment on over 20 million accounts to identify financial performance gaps and causes.
- Developed and deployed remediation strategies for existing customers. a) Risk Reduction – built PD and time to default models and designed advanced collection strategies. b) Incentivizing Positive Behaviors – design of experiments identified profitable features and communication strategies. c) Retaining Profitable Relationships – used profitability response models to avoid negative and non-responders.
- New account acquisition strategy to target and incent profitable relationships. a) Improved Risk Modeling – adding product, non-credit & market data. b) Improved Target Marketing – models for utilization and probability of response enabled profit estimates and cost/benefit measures for each prospect. c) Product Revision – aligned products with desired behaviors and performance. We then back solved for optimal offers with a segment of one.
Results
- Increased ROA from -6% to 3.1% in 2 yrs