What is Predictive Analytics? Predictive Analytics is the stream of the advanced analytics which utilizes diverse techniques like data mining, predictive modelling, statistics, machine learning and artificial intelligence to analyse current data and predict future. To Know more: https://goo.gl/zAcnCR LOAN DEFAULT PREDICTION – A CASE STUDY Content Covered in this video: Business Problem & Benefits The Risk - LOAN DEFAULT PREDICTION Data Analysis Process Data Processing Predictive Analysis Process Tools & Technology

1. 1
Loan Default
Prediction

2. © ALTEN Calsoft Labs 2© ALTEN Calsoft Labs
RISK ANALYTICS
Ever since the Global financial crisis occurred in 2008, there has been a major
ask for strict regulation across the processes/workflows in the finance world.
To meet the compliance, regulators demand the insights into the minute
details of the data.
With accurate Analytics, risk prevention has become the immediate need of
the hour.
Source: NASSCOM
2

3. © ALTEN Calsoft Labs 3© ALTEN Calsoft Labs
STATS ON NPL (NON PERFORMING LOANS)
NPL - A loan on which the borrower is not making interest payments or repaying any principal. At what
point the loan is classified as non-performing by the bank, and when it becomes bad debt, depends on
local regulations.
3

4. © ALTEN Calsoft Labs
Allowing high levels of non-performing loans to persist, on the other hand, can cost
more than two percentage points of economic growth annually.
Courtesy - https://voxeu.org/article/economic-impact-reducing-non-performing-loans
STATS ON NPL (NON PERFORMING LOANS)

5. © ALTEN Calsoft Labs 5© ALTEN Calsoft Labs
Business Problem
To predict whether a loan would be paid off in full or the
loan needs to be charged off and possibly go into default
Benefits
To protect the unwanted financial risk
Source: NASSCOM
LOAN DEFAULT PREDICTION – A CASE STUDY
5

6. © ALTEN Calsoft Labs 6© ALTEN Calsoft Labs
Featured as one of the Top 4 case studies at
NASSCOM Tech series on Analytics 2017
LOAN DEFAULT PREDICTION – A CASE STUDY
6

7. © ALTEN Calsoft Labs 7© ALTEN Calsoft Labs
It is a US based online lending market place.
CLIENT DETAILS
Client Details
Name*
US based peer to peer online lending marketplace
giving loans for business/personal purposes.
Industry Industry
Industry USA
Size (Global Revenue) Around $200 million
7

8. © ALTEN Calsoft Labs 8© ALTEN Calsoft Labs
8
THE RISK - LOAN DEFAULT PREDICTION
The Risk persists throughout the entire loan cycle.
Loan default prediction when loan is in
servicing...
Evaluation
Loan Services Loan Closures
8

9. © ALTEN Calsoft Labs 9© ALTEN Calsoft Labs
Receive the
Datasets (.csv)
Process the
Datasets for
Analysis
Analyze the
Datasets Build
the Model
Visualize the
Analyzed data
DATA ANALYSIS PROCESS
The below figure shows the typical processes of Data analysis of a Dataset.
Source: NASSCOM
9

10. © ALTEN Calsoft Labs 10© ALTEN Calsoft Labs
Data Processing
The data was received as a set of .csv files which gave the complete details. The
processing of the data included the following activities:
o uploading .csv files to Postgresql
o Created joins, tables, views to aggregate the data
o The result was refined datasets
The refined datasets are passed on to Data Analysis team for analysis
Source: NASSCOM
10

11. © ALTEN Calsoft Labs 11© ALTEN Calsoft Labs
Visualize the
data
Monitor/Refactor
the model
Evaluate/ Deploy
the model
Build the Model
Identify the
Suitable Algorithm
Predictive Analysis Process
Source: NASSCOM

12. © ALTEN Calsoft Labs 12© ALTEN Calsoft Labs
30%
70%
Train Test
DATASETS
The refined datasets are divided into train and test datasets in order to build the Model
Source: NASSCOM
12

13. © ALTEN Calsoft Labs 13© ALTEN Calsoft Labs
TOOLS & TECHNOLOGY
oR
oPostgresql
oACL UI Framework
13

14. © ALTEN Calsoft Labs 14© ALTEN Calsoft Labs
The data set sample to build the model
Has 42,535 observations and 14 variables.
is from the year 2007 till 2011
ABOUT THE DATASET
14

15. © ALTEN Calsoft Labs 15© ALTEN Calsoft Labs
Random Forest gave better accuracy and was used for the model.
Confusion matrix/Insights of bad loan
APPROACH
The model was built in the typical classification process. Following is the confusion matrix for various learning algorithms
Source: NASSCOM

16. © ALTEN Calsoft Labs 16© ALTEN Calsoft Labs
PREDICTORS - WEIGHTAGE
The following plot shows importance of the variables/predictors with their weightage
Source: NASSCOM
16

17. © ALTEN Calsoft Labs 17© ALTEN Calsoft Labs
• Home ownership – The home ownership (Rented/own) also mattered. Especially
people staying with rented houses were more prone to default.
• Term of the loan - The probability of the loan default/charge off was more for
the loans that had longer term
• Interest rate – The higher the interest rates, more chances of the loan default
CONCLUSIONS - OBVIOUS
The top three factors that influenced the default/Charge-off for a loan are:
Source: NASSCOM
17

18. © ALTEN Calsoft Labs 18© ALTEN Calsoft Labs
o Annual Salary
o Employment length
• 40% of the defaulted loans were taken for the purpose of
loan consolidation
CONCLUSIONS - REVELATIONS
• The factors that did not contribute much/were insignificant for the cause
of loan default are,

19. © ALTEN Calsoft Labs 19© ALTEN Calsoft Labs
WHO WE ARE
FEATURED ON ANALYST REPORTS
QUALITY CERTIFICATIONS
Technology Consulting and Services
Company
24,000 employees | 20 countries
1000+ Customers include top 6
Fortune 100
Part of $1.85 B ALTEN Group
19

20. © ALTEN Calsoft Labs 20
Healthcare Education
Retail
Network
Hi-Tech
Media & Entertainment
Travel & HospitalityTelecom
INDUSTRIES WE WORK WITH
Focus Industries

21. © ALTEN Calsoft Labs 21© ALTEN Calsoft Labs
GLOBAL PRESENCE
ACROSS 20 COUNTRIES
North America Europe Africa & Middle East Asia
France | Belgium | Germany | Italy
Netherlands | Norway | Sweden | Romania
Spain Scandinavia | Switzerland | UK
India | China
Singapore
USA | Canada Africa | Middle East

22. © ALTEN Calsoft Labs 22
Leveraging Disruptive Technologies to Solve Business Problems
Big Data &
Analytics
Mobility
Cloud
NFV / SDN
UX Design
IoT
WHAT WE DO
PRODUCT
ENGINEERING
ENTERPRISE
APPLICATIONS

23. © ALTEN Calsoft Labs 23
OUR SERVICE OFFERINGS
ENTERPRISE IT SERVICES
Business Applications | Managed IT Services | Enterprise
Application Integration |Enterprise Mobility | Data Management |
Industrial IoT
PRODUCT ENGINEERING SERVICES
Product, Platforms & Extension | Testing & QA Services
Professional Services | Product Support
SDN/NFV & Virtualization | Networking (L2-7) & Security
Embedded & Systems Engineering | DevOps and Test Automation
Cloud Management | Open Source Technologies
NETWORK TRANSFORMATION SERVICES
Improve Customer Experience | Improve Business Efficiency
DIGITAL TRANSFORMATION SERVICES

24. © ALTEN Calsoft Labs 24© ALTEN Calsoft Labs
WHY ALTEN CALSOFT LABS
Industry Experience
• 25 Years of strong Product Engineering and Enterprise IT
experience
• Focus on digital products, software and platforms
• Global footprint – 24,000 people, 20 countries
Industry Standard Processes
• Agile Project Management and Metrics driven Project
Governance Framework
• Agile Project mgmt. tools with 100% transparency and
seamless collaboration
Customer First Approach
• Dedicated Program Manager for relationship,
communication, operation, escalation and Knowledge
Management
Strategic Partnerships & Solution Accelerators
• In-house solution accelerators to drive
innovation, efficiency & automation
• Track record of building Long-term win-win
partnerships (18+, 13+, 10+, 8+ years) with
global customers
Experienced Product Engineering Talent Pool
• 5+ years average experience 27%
Masters degree holders
• 15+ customer patents filed in various
product engineering engagements

25. © ALTEN Calsoft Labs 25© ALTEN Calsoft Labs
CONTACT US
Write to us : business@altencalsoftlabs.com
Visit our Website: https://www.altencalsoftlabs.com
USA | FRANCE | UK | INDIA | SINGAPORE