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LookAhead™ software creates scenario-based forecasts in a strategic decision environment through which managers can quickly analyze portfolio and segment response to program changes, macroeconomic shifts, and other factors.
LookAhead Product Sheet [pdf, 450k]
Banks and consumer finance companies face a number of issues driven by the dynamic nature of consumer portfolios. Among these constant and emerging issues are:
- Balancing revenue generation with acceptable credit risk,
- Creating more robust risk management systems in response to regulatory initiatives,
- Facilitating "value" portfolio management techniques and supporting structures, and
- Building differentiation and strategic advantage.
These and other key challenges are addressed by Strategic Analytics' LookAhead™ Scenario-based Forecasting Software, a proven analytic capability available for consumer credit portfolios. LookAhead is being successfully used for credit cards, home equity loans and lines, auto loans, personal loans and lines, mortgages, small business and other retail loan types.
LookAhead software is a breakthrough portfolio forecasting capability. It provides users with a rich simulation of their consumer portfolios into future periods and across macroeconomic and business scenarios. LookAhead software enables our clients to develop and change strategies with greater confidence—resulting in decisions that can greatly increase the value of the enterprise. With portfolio simulation, managers can make faster and more certain decisions and proactively manage developing crises.
LookAhead software creates baseline forecasts in a strategic decision environment through which managers can quickly analyze portfolio and segment response to program changes, macroeconomic shifts, and other factors. The result is a process that facilitates value-based management of the portfolio: precise actions that directly affect portfolio value are readily identified.
LookAhead Configurations
- Loss and Delinquency – Currently used at both the corporate level for coordination and at the business unit for operational loss forecasting and planning. Key variables include delinquency, charge-off, bankruptcy, and recovery for both accounts and balances. Line of credit products also focus on attrition, activation and line utilization, while installment products study prepayment. May be setup with flow rates or roll rates.
- Revenue – Having a robust forecast for revenue is increasingly important for many products given today's origination and new-product strategies. Penalty fees are increasingly important to the bottom line, e.g., late, non-sufficient funds, overlimit, returned check fees. Non-penalty fees such as interest (tied to utilization), interchange, (related to revolving balances), prepayment, utilization and attrition combine to make modeling complex. Making sure that this forecast is tightly connected to your outlook for credit losses is one of the key values delivered by LookAhead.
- Purchases and Payments – For groups charged with a close understanding of the dynamics of purchases and payments. Behaviors in these areas are driven by demographics and new product features, and the modeling challenge here has been increasing due to the dynamic competitive environment and changes in how subgroups interact with credit/debit products. A good forecast that can be quickly and accurately tuned to these factors is becoming increasingly important to overall product results.
- Basel II – LookAhead can be used to implement the Basel II formulas while gaining the advantages of Dual-time Dynamics with sparse data sets and LookAhead's ease of use and workflow. With Basel II, the modeling focus shifts to Probability of Default (PD), Loss Given Default (LGD), and Exposure at Default (EAD). LookAhead can stress these variables or run the Basel II formulas for Expected Loss (EL), Unexpected Loss (UL), and Risk-weighted Assets (RWA).
- Collections – Flexible and accurate coordination for Collections can save significant sums. LookAhead can model full bucket detail tailored precisely to your definitions including bankruptcy, extension and repossession. Roll rates can be modeled using Dual-time Dynamics to give much finer control and monitor monthly collections impacts. Results may be used to gauge collections capacity planning, where a better model balancing load to capacity can save millions in expenditure and result in better collection rates. Use LookAhead to tie your collections inventory to key in-house metrics like collector load and right-party contact in order to drive a far more precise operation.
- Operational (Call Center) Forecasting – beyond Collections, there are other customer-facing operations that can be run more efficiently through better forecasting. Call center volumes fluctuate with your forecast for delinquency, line increases, marketing plans, bankruptcy, purchases/payments, and the macroeconomic environment. LookAhead can provide fine-grain forecasting at monthly, weekly, hourly or even minute-by-minute to deliver unrivalled call-center capacity planning. Savings through better workforce and facilities utilization can be very significant to all sizes of call-center operations.
LookAhead Software Features
- Quantifies impact of exogenous portfolio effects
- Creates baseline forecasts while adapting to changing portfolios
- Creates forecasts using client-defined business scenarios
- Provides dynamic data recalculation across key business variables
- Enables forecasts of portfolio results under various macroeconomic scenarios
- Provides sophisticated portfolio data browsing and plotting
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