A Pacific based trading bank was seeking to capture greater market share in the traditional core segments of housing loans and personal loans. The imperative was to achieve profitable growth leveraging accepted best practice techniques in respect of credit scoring systems and processing to drive credit quality, processing efficiency, consistency and lending volumes.

FCL was engaged to generate a sense of urgency to formulate, develop and install a credit scoring system and ensure the core requirements were delivered. The manual system in use was very cumbersome, slow, costly and not meeting customer expectations. Credit Scoring was a new concept to the Bank so the development approach was to prototype a scorecard system by building one with a rapid development tool. With a working prototype model the Bank was able to more fully explore requirements, functionality, methodology and risk considerations while maintaining business momentum with the current manual system.

Combining the key learnings from the prototype with a robust assessment, a new credit scoring system was implemented. Scorecards were defined, data validated, credit rules, attributes and outcomes for each underwriting standard were determined. To drive the process FCL completed detailed process mapping of the manual system through to the new credit scoring system. From this new forms and procedures were produced for use across the branch network.

Risk separation principles and credit underwriting standards were developed and agreed together with approved testing criteria on both the portfolios and individual scorecard elements. The critical elements of data quantity and quality were addressed by the data capture system and parallel live processing was a fundamental step in achieving the best business outcome.

The final solution was implemented supported by an intensive training program, documented policy and procedures with a commitment to a disciplined approach to consider further improvements and refinements moving forward.

The credit scoring system for consumer lending was successfully implemented and lending volumes increased by over 300% in 3 months. Initial volume pressures were quickly resolved and the Bank continues to refine the applicable scorecards to changing market conditions.