A novel collection optimisation solution maximising long-term profits: a case study in an international bank. Issue 4 (2nd October 2017)

• Record Type: Journal Article
• Authors: Duman, Ekrem; Ecevit, Fatih; Çakır, Çağrı; Altan, Orhan
• Is Part Of: Journal of decision systems. Volume 26:Issue 4(2017)
• Page Start: 328
• Page End: 340
• Publication Date: 2017-10-02
• Subjects: Collection scorecard -- optimisation -- risk management; Decision support systems -- Periodicals; Management information systems -- Periodicals; Information resources management -- Periodicals; Information storage and retrieval systems -- Periodicals; Management -- Communication systems -- Periodicals; Decision support systems; Information resources management; Information storage and retrieval systems; Management -- Communication systems; Management information systems; Periodicals; 658.40305
• DOI: 10.1080/12460125.2017.1422318
• Languages: English
• ISSNs: 1246-0125

Abstract

Abstract: 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.