Business Challenge:

The client was a private sector bank in Jordan and had seen substantial growth in providing retail banking products. The bank had a forward looking approach in enhancing its risk management and had taken steps to reach acceptable levels of risk.

The project was undertaken to enable the bank to develop expert application scorecards and determine the most appropriate criteria to arrive at a decision (the \Accept - Reject Decision\) taking into consideration the risk profile of the customer. The main objective of the scorecards was to ensure that loan applications are not incorrectly rejected given the criteria the bank was currently adopting. The bank  selected Aptivaa to design and implement all the necessary components of the application scorecard framework for meeting the above objective.

Our Approach

The deliverables were (i) Development and Deployment of the Application Scorecards for the above retail products (excel format and access database) (ii) Documentation of the Retail Scorecard methodology Document outlining the scoring philosophy and procedures & (iii) Enabling the provision of database (Access database) to enable capture the scoring parameters and final score of accepted and rejected customers for future analysis. Given below are the work steps followed by us to ensure proper and complete delivery.

Assessment: Credit Cards, Personal Loans and Residential Mortgages were identified from the retail product basket for which retail scorecards were built. After defining the scope, discussions were held with the Bank officials about the product programs and their unique features and an assessment of the product features and minimum lending criteria. This was followed by identification and analysis of the parameters to be included in the scorecards, for each of the products.

Development: Before the actual development of the scorecards discussion were held with the bank about the feasibility and applicability of the parameters selected based on which the parameters and their ranges and scores were finalized. This was followed by the development of the Expert Application Scorecards for the retail products.

Documentation: This step involved the documentation of the Retail Scorecard Approach & Methodology, the scoring philosophy and scoring procedures and the development of Scoring Manuals for each product.

Deployment: The final step involved the deployment of the developed Retail Scorecard for capturing scoring parameters and final score of accepted and rejected applications for future analysis

Business Benefits

The Scorecard enabled the bank to accurately assess the risk of the new loan applicant. The automation of the credit decision process brought tremendous savings in process times to the bank and increase efficiency of the credit appraisal process by reducing application screening turnaround time. It helped in adopting superior technique of score based portfolio valuation and in migrating to a risk based pricing setup. It brought objectivity & consistency in credit decision making across the bank/lending institution and enables management to implement a consistent credit policy, independent of personal biases and whims.