A novel collection optimisation solution maximising long-term profits: a case study in an international bank
Journal of Decision Systems, cilt.26, sa.4, ss.328-340, 2017 (Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 26 Sayı: 4
- Basım Tarihi: 2017
- Doi Numarası: 10.1080/12460125.2017.1422318
- Dergi Adı: Journal of Decision Systems
- Derginin Tarandığı İndeksler: Scopus
- Sayfa Sayıları: ss.328-340
- Anahtar Kelimeler: Collection scorecard, optimisation, risk management
- Boğaziçi Üniversitesi Adresli: Evet
Özet
When customers fail to pay the amount they owe to their bank related with a credit product (credit cards, overdraft accounts or instalment loans), the bank starts the collection process. This process typically lasts for a particular amount of time after which the customer is labelled as defaulted and a litigation period is launched. Banks try to minimise the percentage of credit exposure that goes to litigation since it negatively affects the bank’s profitability. Accordingly, they take various actions to maximise the collections before litigation. In this study, we approach this problem from a different perspective as we maximise not the short-term collections but the long-term revenues from customers by incorporating the churn effects of these actions in our modelling.