Credit Risk Optimisation
Use our advanced mathematical models to bring significant uplift in your credit decisions.
Find that sweet spot in credit lending
Make optimal credit decisions that yield profit increases in excess of 20%.
Principa credit specialists can provide you with an understanding of the most profitable point at which to lend.
Using mathematical optimisation and industry knowledge, we’ll help you predict the optimal loan value that maximises profitability at minimal risk for each potential customer.
Traditional decision-making tools like risk scores, affordability models and policy rules are typically used independently within a credit decision.
Risk managers are beginning to appreciate that there are many sensitivities between the models and combining them all is a difficult prospect. There are a variety of decisions across the lifecycle that warrant a novel approach.
How we do it
We take your book and will workshop to develop a strategy where we calculate exactly how much you should lend to each individual.
We look at accounts and behaviour of the previous year and decide on what would have been the optimal amount to have lent to each individual for maximum profit and then develop the models based on this for future applicants based on sensitivities such as affordability, down-selling, risk and early settlements.
Principa brings mathematical optimisation to help businesses make better credit decisions with the following two offerings provided as a hosted solution that is integrated into your execution engine:
Full Custom Optimisation
We will build sensitivity (component) models on your historic data and then bring the models together into our mathematical optimisation algorithm where a huge range of scenarios are tested culminating in an optimal strategy.
We utilise our expert sensitivity models and conduct the same mathematical optimisation algorithm to determine (ultimately) an optimal strategy.
“Standard Bank is committed to improving our credit risk management throughout the Bank. Principa understands the South African banking industry and can offer us unique credit and risk expertise which we can use to achieve our strategic objectives.”
Maximise Profitability, Minimise Risk
Find that profitable sweet spot in credit lending. Contact us for more information and pricing on our mathematical optimisation for credit lending.