Credit default scoring debt portfolio


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Risk assessment of existing asset asset portfolio for eagerly detecting high risks and performing targeted interventions.

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  • Credit default scoring debt portfolio

    1. 1. Credit Default Scoring: Asset Portfolio Business Intelligence Technology Consulting Analytics Consulting © 2014 Valiance Solutions
    2. 2. What is Default Scoring? Default scoring means applying a statistical model to assign a risk score to an existing credit account. On a higher level, default scoring also means the process of developing such a statistical model from historical data. Need for Credit Scoring Banks aggressively monitor their asset portfolio for future risk of defaults. This is useful for early detection of high risk and enables the organization to perform targeted interventions. There are number of ways Banks do this, some banks adopt highly sophisticated and automated approach of default scores resulting in more accurate predictions whereas for some it is still more of a manual process requiring human intervention. Default Scoring has also evolved with firms experimenting with various new techniques like machine learning, support vector machine etc. © 2014 Valiance Solutions
    3. 3. Default Scoring Solution Framework to eagerly detect high risk accounts and perform targeted interventions. Existing Customers Potential Defaults in Near Term Targeted Intervention/ Adequate Provisioning © 2014 Valiance Solutions
    4. 4. Implementation Framework 1 Regression Modeling Response tracking 3 Borrower Details Fed into the System Feedback Loop Existing Loans 2 4 The algorithm developed will return default score High Risk (Pro-Active Intervention) Feedback Process Low Risk Medium Risk Feedback is used to improve the model performance over period of time. © 2014 Valiance Solutions
    5. 5. Modeling Phases Data Mining Hypothesis building Data cleansing Default Likelihood Model Understanding Default patterns Profiling patterns  Algorithm for fraud prediction Iteration & Validation Validation of Model on test data Implementation of framework Host the algorithm on the client’s system Cross-validate the scores generated by the system Strategy roll-out and testing Roll-out the algorithm on the live system Continuous monitoring of through the door population for any changes in patterns © 2014 Valiance Solutions
    6. 6. Determining Cut Off Score Point at which separation between cumulative percentage of good and bad customers is maximum determines the cut off score for distinction between high risk & low risk customers. © 2014 Valiance Solutions
    7. 7. Sample Output Deciles are order by default scores in decreasing order. Nearly 70% of customers who are likely to turn into bad debt in next 6 months found in 40% of total customer base. Decile: 10% of customers © 2014 Valiance Solutions
    8. 8. Default Score: Benefits Over Business Intelligence  Predictive in nature rather than reactive. Gives early indicator of portfolio turning into bad debt.  Detects hidden patterns in default scenarios and interaction amongst different attributes that can’t be modeled in BI tool.  Identification of significant factors that affect portfolio default.  Provides objective assessment of risk in hands of team. Complements business judgment in a way making it more effective.  Solution can be integrated with IT systems to provide alerts to Risk department for potential bad debt indicators.  Saves time and money involved in verification of accounts.  Solution can be further extended to build collection scores for predicting amount that can be recovered in case of potential bad debt scenario. © 2014 Valiance Solutions
    9. 9. About Us     Valiance Solutions is an analytics consulting firm providing business solutions to clients globally using cutting edge technologies. Valiance started it’s journey in 2011 with two employees and since then it has grown to 15 plus team. It has served as consulting partner in CRM space for retail firms, US based market research firm and firms like Reliance and Easy Cabs in India. Leadership team comes from IIT’s and IIM’s with 24 years of combined experience in delivering IT and analytics solutions to Investment Banks globally and BFSI companies in India. Advisory team comprises of seasoned industry executives who have serve as thought leaders with global firms. Head Quarters: Delhi, India Global Clientele Strong Team © 2014 Valiance Solutions
    10. 10. Executive Team Vikas Kamra (Chief Executive Officer) B.Tech, IIT Delhi Ankit Goel (Chief Technology Officer) B.Tech, IIT Kharagpur Shailendra (Chief Analytics Officer) DMET MERI 6 years of strong experience building and delivering technology solutions globally. Heads overall strategy, business development and marketing for Valiance. Takes keen interest in Big data technology and its application for commercial business solutions collaborating with clients on Data Analytics strategy. Consulted with Fortune 100 firms like Bank of America, Merrill Lynch, Jefferies out of onsite locations. 9 years of strong experience in software development, application architecture and scalable applications development. Served in roles of Technical Architect, Technology Consultant for Fortune 100 investment banks. Heads product development, engineering & delivery for clients. 5 years of analytical consulting experience working with Fortune 100 Financial companies across EMEA, US and Indian Subcontinent region. Worked on several advanced level analytics initiatives with Life Insurance companies, Mutual funds, Credit Card Companies, NBFC’s in India in Credit Risk, Marketing and Customer Analytics He is responsible for design and development of analytics framework for Banking and Insurance clients globally for Valiance © 2014 Valiance Solutions
    11. 11. Advisory Team Lokesh Gupta (General Partner, Spice Investment Fund) B.Tech, IIT Delhi MBA- IIM Ahmedabad Ajay Piwhal (Head BI & Analytics, Airtel) B.Tech, IIT Delhi MBA- IIM Ahmedabad Dinesh PHD, IIT Delhi Lokesh is working as General Partner in Spice New Investment fund. In this current role, Lokesh is responsible for identifying startup companies in Education domain and help them transform their ideas into big enterprises. Prior to that Lokesh was heading Spice Labs as its CEO.  Ajay spearheads analytics division at Bharti Airtel since 2 years with responsibility for customer insights, Cross Sell up sell and other key analytics initiatives. Prior to this he was responsible creating analytics competency and successfully applied analytics in direct marketing initiatives and multiple business functions across the organization with Max Life Insurance. Before Max Life Insurance, he has worked with firms like GE in setting up analytics team for its Insurance clients and IBM and PWC on similar initiatives. Dinesh has 12 years of strong experience in data driven analytical consulting, modeling and statistical analysis. He has held senior positions in companies like Cequity, ICICI, GE Capital, Inductis at senior positions in analytics capacity. Throughout his career has provided analytical leadership, tactical solutions and measurable delivery of financial opportunities through advanced data mining/predictive analytics solutions for various business verticals like Retail, Insurance, FMCG, Automobile, Travel & Hospitality, Telecom, Mutual Funds etc. © 2014 Valiance Solutions
    12. 12. What do we bring Onboard? Domain Knowledge Industry Exposure Passionate Team • • • • • Technical Expertise Result Focus Learning's from industry on data collection, data analysis and MIS. We have interacted with 14 plus Banking & Insurance firms on their business problems, met with stake holders and presented solution frameworks. Team with strong desire to excel and succeed not just for us but for our clients. Advisory panel consists on individuals who have spearheaded analytics in India. Successful implementation of decision frameworks in areas of Claim fraud, Customer Retention and Marketing. Knowledge of setting up consistent and right data collection process and framework for future Analytics & BI initiatives. Strategic partnership vision to establish Analytics as a key competitive advantage in Industry for our clients. © 2014 Valiance Solutions
    13. 13. Valiance Solutions Private Limited A-146, Opposite TCS building, Sector 63, Noida, U.P - 201306 India. Contact Person: Vikas Kamra Office No: +91 120 4119409 Contact No: +91 8750068961 © 2014 Valiance Solutions
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