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Experian Convex | Use Cases | Finance
Financial institutions (banks, factoring, leasing, finance and asset management companies) can benefit from Convex to ensure operational efficiency, healthy portfolio management, proper provisioning, correct marketing and fraud management.
Available Use Cases
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Finance
Discover how we can help
Improve operational efficiency
Challenges
- Lengthy processes
- Slow decision-making
- Infrequent client touch-points
- Siloed customer information
- One-fits-all client experience
Opportunities
- Leverage AI to predict whether each application should be approved, rejected, or manually reviewed and even manual review team (branch, region, head office)
- Configure different levels of automation or AI assistance for different segments, sectors, products and credit levels
- Guide credit origination teams to most important factors influencing credit level definition and automation
Loan default prediction
Challenges
- Many credit decisioning systems are driven by scorecards where these scorecards had been simplistic rule-based systems in the past. In the recent years, organisations started to develop scorecards with the traditional techniques. However, developing scorecards, maintaining them based on the macroeconomic dynamics and behavioral needs are difficult and time consuming
Opportunities
- Determine lending risk and payment default rates in situations using different level of information
- Simplify the process of predicting whether the customer will default on their credit or not to
- Minimize credit losses which will an important input for the provisions of the bank
- Grow healthy portfolio limits of the institution
- Explain the reasoning behind the scoring thanks to Machine Learning Explainability algorithms (Shap values)
Income estimation/Limit assignment
'Challenges
- Improper and incorrect income estimation
- Short limits for affluent clients
- High limits for low-income customers
- Lack of automation for the models and using outdated models
Opportunities
- Utilize AI algorithms to increase the power of income estimation models and use 360-view of the customers to define the final income of the customer
- Assign limits based on the income of the customer which will allow accurate and proper limits for each customer
- Automate continuos-targeted models which will ensure inflation and other macroeconomic factors will be considered in the new models
Pricing
Challenges
- One-fits-all pricing for each customer
- Lack of competition in the market for pricing
- Loss of price-sensitive customers due to pricing
- Loss of revenue for non-sensitive clients
Opportunities
- Develop pricing models with the best-in-class AI algorithms
- Differentiate pricing for each segment, product and customer
- Increase through-the-door customer flow with the campaign prices
- Increase revenue with the right pricing
Early warning prediction
Challenges
- Develop pricing models with the best-in-class AI algorithms
- Differentiate pricing for each segment, product and customer
- Increase through-the-door customer flow with the campaign prices
- Increase revenue with the right pricing
Opportunities
- Determine customers with the payment stress
- Differentiate early warning actions for stressful customers
- Improve credit roll rates and portfolio quality
- Decrease operational action costs and potential future collection costs
Collection
Challenges
- High forward roll rates
- High operational collection costs
- Increased provision in the financial tables of the company
Opportunities
- Machine learning models to estimate forward roll rate probability
- Increased collection rates
- Decreased operational costs
- Better provisioning in the company level
Churn prediction
Challenges
- Loss of customers without prior notice
- No action for the customers based on their leaving probability or value to the company
Opportunities
- Identify customers who tend to leave in the near future with the AI algorithms
- Take actions to retain valuable existing customers based on churn prediction models
- Maintain revenue from the existing portfolio
Propensity prediction
Challenges
- Limited number of products and limited revenue from the customers
- No proactive cross-sell or up-sell actions
- One-fits-all product campaigns
Opportunities
- Identify customers who tend to buy additional products or increase usage in their existing products
- Take proactive cross-sell or up-sell actions to get share in the market for specific products from the valuable customers
- Grow the portfolio and product coverage
Activation prediction
Challenges
- Non-activated products after product asssignment to the customers
- Lack of usage of the products
Opportunities
- Increase in the active customer base
- Increase in revenue from the products
Segmentation
Challenges
- Lack of granular customer segments
- Traditional customer segmentation without analytical methods
Opportunities
- Granular customer segmentation including risk segmentation or marketing segmentation concepts utilizing advanced clustering AI algorithms
- Customized customer management or risk activities based on customer segments
Customer lifetime value estimation
Challenges
- Limited information regarding the value of the client
- Standard actions to approach each client independent of the value of the client
Opportunities
- AI models can help calculate the lifetime value of the clients
- Increased revenue
- Customized client actions for affluent clients
Fraud
Challenges
- Lack of strong fraud models
- Lack of adequate number of fraud events in the data
Opportunities
- AI is ideal for anomaly detection which helps to capture unusual events in the behaviour of the customer
- Fraud data events can be increased within the portfolio sample with oversampling, undersampling or class weight features
ATM cash optimization
Challenges
- Excess cash allocation in unused ATMs
- Lack of enough capital in active ATMs
- Improper allocation of FX currencies in required ATMs