Cutting charge-offs by $10MM a year through collections strategy

Building a centralized credit analytics function across all US consumer products and using it to rethink collections.

$10MMannual charge-off reduction
3 yearsin a row of credit losses better than plan
5locations in one analytics function

Situation

Collections and risk-appetite decisions were being made separately for each product, by teams in different locations, with inconsistent data and methods. That made it hard to see which treatments actually reduced losses.

Approach

  • Built a centralized credit analytics function covering risk appetite and collections strategy across all consumer products, with a team spread across five locations.
  • Optimized collections strategies across consumer products.

Result

Collections changes reduced charge-offs by about $10MM a year, work that was recognized at RBS's international conference in Edinburgh. Credit losses came in better than plan for three consecutive years. Gaurav was promoted from VP of Collections Strategy & Analytics to lead the broader function.

Relevance for clients

Collections is the most underinvested lever in consumer credit. Segmented treatment strategies with proper test-and-control often reduce losses faster than any change to underwriting.

This case study describes work done by our founder, Gaurav Agarwal, as an employee of the organization named. Figures are as publicly reported.