Premier analytics service provider, Quantzig announces the completion of its credit risk modeling and compliance analytics engagement. The case study offers comprehensive insights into how they helped a telecom service provider to create a risk model to optimize collection efforts and reduce defaults.
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Decision Intelligence-based Credit Risk Modeling For a Telco (Graphic: Business Wire)
The traditional objective of scorecarding and credit risk modeling was based on the ability to manage delinquency and take corrective actions to prevent bad debt. But today, there is an opportunity for telcos to convert their credit risk models into a competitive differentiator. This involves using credit risk management processes and systems to fine-tune offerings and identify potential customer groups.
As experts in credit risk and compliance analytics, Quantzig offers credit risk modeling solutions that help businesses to improve how they measure, manage, and mitigate the credit risk inherent in their loan and investment portfolios. Request a FREE demo for comprehensive solution insights.
Factors that prompted the telco to develop risk scorecards to predict the payment behavior of existing accounts
Absence of reporting tools and data management systems: The lack of a well-defined data management and reporting tool, resulted in reports being generated manually. Such an approach was not just time-consuming, but it also blocked valuable resources and further delayed the decision-making process. This is one of the factors that prompted the client to develop scorecards and implement a comprehensive reporting tool to support both pre-defined and bespoke reports while minimizing the time for generating reports.
Lack of satistical scoring models and analytical frameworks to analyze risks: With no statistical risk scoring model in place, the client’s risk assessment criteria were solely based on expert ratings and policies. To drive better results, the client wanted to deploy a statistical framework for each phase of the customer life cycle to assess, optimize, and monitor the customer journey.
Unclear risk segmentation strategies: The credit risk segmentation models used by telcos today seem too unsophisticated to deal with the current complexity of the customer base and with the growing pressure of bad debt. Deploying a statistical predictive risk behavioral scoring would allow greater differentiation in most of the credit management processes improving their effectiveness and the overall customer experience.
Get your FREE customized proposal to know how Quantzig’s credit risk modeling services enable faster, better-informed credit decisions through a holistic and consistent assessment of risk factors impacting business growth.
How did credit risk modeling help the telco address their pain points?
Quantzig’s risk analytics experts used regression modeling to assess the historical payment data to identify the key triggers and features indicating payment defaults. This was followed by the second phase, where they used cross tab analysis to map the triggers followed by credit risk modeling and early warning signals tracking on the customer data and created a risk-scoring model for all customer accounts. The solutions enabled the client to-
- Reduced payment defaults by 50%
- Improve revenue growth
- Identify potential defaulters
- Optimize collection efforts to improve collection revenues
- Develop a targeted collections approach
Over the past 15 years, Quantzig has helped Fortune 500 companies solve some of the toughest business problems using a unique combination of design thinking frameworks, plug-and-play innovation accelerators, and an army of agile decision scientists. Want to know more? Contact us for a free pilot.
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The complete case study on credit risk modeling is now available.
Quantzig is a global analytics and advisory firm with offices in the US, UK, Canada, China, and India. For more than 15 years, we have assisted our clients across the globe with end-to-end data modeling capabilities to leverage analytics for prudent decision making. Today, our firm consists of 120+ clients, including 45 Fortune 500 companies. For more information on our engagement policies and pricing plans, visit: https://www.quantzig.com/request-for-proposal
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