Solution Brief
Mitigate risk and drive returns
Proactively mitigate risk and drive returns in captive finance with SAS® for Risk Modeling and Decisioning
The issue
Being able to quickly deploy new and innovative models to meet changing business needs is essential in today’s evolving financial environment. Captive lenders face increasing industry disruptions and challenges that can reduce their competitiveness, including shifting interest rates, geopolitical tensions, long and high-risk credit life cycles, and rising compliance costs.
For example, while inflation has moderated in many regions, elevated interest rates continue to weigh on borrowing costs and economic activity, requiring meticulous navigation. Moreover, governments are increasingly prioritizing structural reforms, sustainability initiatives and technological advancements, posing new challenges. Adaptability is the key to thriving in this constantly evolving landscape.
The challenge
Being agile requires insights that help you determine what changes to make so you can act quickly. Risk modeling can give you those insights – unfortunately, many risk models never make it to deployment due to long development cycles or challenges with data, analytics, validation and processes. Models that are not deployed cannot deliver business value, no matter how innovative they are. As firms increasingly rely on risk models to feed automated credit decisioning processes, any gap in their capabilities will likely amplify shortfalls in business results, including:
Inaccurate credit risk assessment
Overly simplistic models may not fully account for individual customer risk profiles, leading to poor credit decisions or mispriced loans.
Missed market opportunities
Outdated decisioning frameworks combined with a lack of dynamic pricing could prevent organizations from responding to changing market conditions.
Decreased customer satisfaction
Manual or fragmented decisioning workflows would slow down credit approvals, frustrate customers and reduce operational efficiency.
Regulatory and compliance challenges
Constantly changing regulations: Credit and collections are heavily regulated in most regions. Staying compliant with local, national and international laws – such as the Fair Debt Collection Practices Act (FDCPA) in the U.S. – is critical but often challenging as the rules evolve.
Privacy and data security: Handling customer data requires stringent security measures to prevent breaches or misuse, particularly with increasing data privacy regulations such as GDPR (Europe) and CCPA (California).
SAS provides a framework that integrates cross-industry best practices to address these challenges. It delivers data management; model development, deployment and monitoring capabilities; intuitive decision-process design; and rule-set management capabilities that give organizations a repeatable, auditable, transparent, automated and much-shortened life cycle to develop and manage risk models and decision strategies.
SAS enables captive lenders to:
(Realize more credit approvals; Achieve higher recovery rates and lower credit losses; Save millions in charge-offs; Increase operational efficiency and productivity)
Our approach
Mitigate risk in a shifting financial landscape. Our data and AI-powered SAS for Risk Modeling and Decisioning solution helps you solve these challenges, enhance the customer experience and stay competitive. With SAS, you can automate the entire credit workflow to make the best possible financing decisions in seconds, enabling greater customer satisfaction and retention.
We approach the problem by providing software and services to help you:
Lend credit and lease vehicles faster with less risk
Enhance growth and lower OpEx with an automated intelligent decisioning solution for granting credit and leasing using advanced analytics and AI/ML.
Optimize your revenue from each customer
Optimize credit limits and financing prices for new vehicle lending and leasing; proactively manage off-lease portfolios with automated analytics and decisioning.
Monitor credit and protect your portfolio
Robust and accurate early-warning capabilities provide a swift response to delinquencies or changes in customer risk status.
Minimize collections costs and maximize recovery amounts
Proactively address delinquencies and determine the most effective collection strategy to maximize recoveries through advanced analytics and decisioning optimization.
SAS difference
Outrank the competition
SAS for Risk Modeling and Decisioning protects your business by ensuring we’ve taken care of all the critical details for you. Combine structured and unstructured data from disparate sources. Prepare it to seamlessly integrate with state-of-the-art risk modeling capabilities while supporting best-practice techniques and open-source code beyond traditional scorecards. Adhere to industry standards and regulations with built-in compliance features, reducing non-compliance risks.
SAS empowers you with comprehensive credit risk management capabilities:
Risk decisioning
- Assess customer risk profiles with unparalleled precision by analyzing a wide array of data points, from standard bureau information such as credit history and payment behavior, through to macroeconomic factors, financial indicators, open-banking data, as well as unstructured data from telecoms, social media, rental payments and reviews.
Automation for productivity and performance
- Improve productivity, accuracy and responsiveness of lending and leasing by automating and executing the same decisioning in both batch and real-time operations.
Solution flexibility and change management
- Stay competitive, agile and responsive to the shifting financial landscape.
- Make real-time decisions with multiple offers and counteroffers.
- Perform fine-tuning and adjustments with extensive scenario analysis.
- Enable dynamic updates to seasonal promotions, subventions and other market-driven strategies without the need to redeploy decisioning rules.
Remarketing decisioning
- Automate key remarketing processes and drive higher returns by proactively managing the portfolio nearing end-of-lease.
- Model the ideal prices of vehicles.
- Optimize the channel and location for vehicle allocation, accounting for vehicle and channel characteristics, market demand, price sensitivity, economic conditions, costs and time-to-sale metrics.
Risk based pricing and limit management
- Determine limits using affordability assessment processes and analytical tools, create interest rate models that accurately reflect individual customer risk, determine price points to maximize profit, using a risk-adjusted return on capital (RAROC) pricing engine.
Dynamic risk profiling and early warnings
- Integrate and leverage internal and external data from diverse sources to continuously assess customer risk, monitor early-warning signals and track real-time portfolio performance on executive dashboards using advanced analytics and scenario-based strategy evaluation.
Proactive portfolio monitoring
- Anticipate defaults and delinquencies with an early-warning system (EWS) that facilitates credit decisioning on restructuring terms and conditions.
Collections optimization
- Increase productivity and improve KPIs, such as roll rates, recovery rates, days sales outstanding (DSO) and cost per contact (CPC) using advanced optimization algorithms and techniques to find the most efficient solution.
- Develop advanced models that incorporate a comprehensive range of factors, including payment probability, expected payment amounts, collection costs, roll rates, charge-offs and attrition.
Scenario analysis
- Analyze collection scenarios under varying constraints and input parameters.
- Monitor collections strategies in real time through integrated dashboards.
SAS for Risk Modeling and Decisioning empowers business users to uncover valuable insights without the need for coding or advanced data science expertise, ensuring timely access to critical information for everyone.
Customer case studies
Use cases
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Credit origination with precise credit decisioning
Build end-to-end lending and leasing decisioning processes. Automate precise credit risk assessment and ensure corporate and regulatory compliance. Make real-time decisions with multiple offers and counteroffers.
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Risk based pricing and credit limit management
Determine limits using affordability assessment processes and analytical tools. Create interest rate models that accurately reflect individual customer risk. Determine price points to maximize profit using a RAROC pricing engine.
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Automated vehicle remarketing decisioning
Automate key remarketing processes and drive higher returns by proactively managing the portfolio nearing end-of-lease. Model the ideal vehicle price, channel and distribution location by analyzing a wide variety of conditions.
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Proactive risk profiling and portfolio monitoring
Continuously assess each customer's risk profile and track real-time portfolio performance. Anticipate defaults/delinquencies with an early-warning system (EWS) that facilitates decisioning on restructuring terms and conditions.
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Credit collections optimization
Increase productivity and improve KPIs using advanced optimization algorithms and techniques to find the most efficient solution. Analyze debt collection scenarios and monitor strategies in real time through integrated dashboards.