Customer segmentation

Customer segmentation is the grouping of applicants and borrowers by shared characteristics. Lenders group them by risk and by the channel or product involved, then set policy for each group, including its limits and how it is treated.

Example

As an illustration, a lender reviews 200 online applications and 200 branch applications, finding 12 bad outcomes in the online group and 6 in the branch group. After reviewing those results, the lender might choose a lower limit for the online group under a policy it writes.

Decisimo’s free calculator for the riskiest segments of a loan book finds application segments whose bad rate runs above the book’s by more than chance would explain.