Data Analytics in Collections is for Everyone—Even You!
Billy Beane will forever be recognized as the person who mainstreamed the use of data analytics in major league sports. Beane recognized the connection between scoring runs and having a high on-base percentage. And so he became less-focused on a player’s personal attributes like height, weight, and speed, and instead started paying attention to attributes correlated with getting on-base. And the Oakland A’s started wining—a lot!
You hear a lot about Big Data these days. Intimidating terms like artificial intelligence and machine learning are being touted everywhere it seems. And sure, we all accept the fact that analytics brings a better result, but for most small to medium-sized lenders, they just can’t afford to build-out internal risk departments filled with quants and statisticians. If you find yourself in that camp, this message is for you…
Have you ever wondered if it’s better to be more aggressive with contacting the highest risk borrowers carrying the highest balances? Or maybe it’s better to focus more staff on the lowest risk borrowers (the “low hanging fruit”). Some would argue it’s the middle-risk borrowers that deserve the most attention.
And should we start contacting accounts when they are 5 days past due? 15 days past due? More? Even better, how about a tiered-strategy with specific contact schedules for each type of borrower-risk, and with tiered groups by outstanding balance? And then setting up similar campaigns for calling, texting, and emailing?
First of all, all of this sounds great in principal, but it’s virtually impossible to implement with most LMS software. Second, how is anyone supposed to know the optimal timing for every facet of all these contact schedules? Billy Beane has already proven to the world, it’s this optimization that makes all the difference.
And so we’re back to the original deal-breaker that all this knowledge requires big budget risk departments running myriads of queries to data mine all the answers. WRONG!
Champion/challenger campaigns allow any collections manager to setup competing strategies that run side-by-side for a set period of time. Don’t have statisticians to flesh out the answers? No worries—we’re taking out the expensive middle-man! You’ll get your answers through experimentation. You’ll use your business experience and intellect to create competing contact strategies to learn what works best! And this is how you’ll gain the same advantage as your biggest competitors.
Lendisoft LMS is the first of its kind, bringing true A/B testing capabilities in a cloud-based loan management package. Our simple user interface is highly intuitive, with all the complexity hidden behind the scenes. It just works!