In a recent post, my colleague Martin Germanis talked about the importance of optimization in collections. Toyota Financial Services has put this into practice with dramatic results.
Toyota’s Collections Treatment Optimization program integrates decision management, reporting and advanced analytics to provide a data-driven, scientific and customer-centric approach to collections. During its first year, the program helped more than 6,000 customers avoid repossession and stay in their cars, and prevented 50,000 customers from reaching a stage of delinquency that would affect their credit.
“Working with delinquent customers to keep them in their cars while working out payment options has helped Toyota avoid millions of dollars in losses,” said Jim Bander, national manager for decision science at Toyota Financial Services. “It’s a win for our customers, and a win for Toyota. Furthermore, it reduced our operating expense ratio by allowing Toyota to grow our portfolio by roughly nine percent, without adding collections headcount. This has also enabled us to tie future lending decisions to our collections abilities – putting more customers behind the wheel of a Toyota.”
Using FICO® Xpress® Optimization Suite and FICO® Model Builder, Toyota Financial Services was able to bring statistical modeling, forecasting, predictive modeling and optimization into a single framework that allows the rapid simulation of multiple scenarios and then the deployment of an optimal strategy into production. The implementation divides customers into micro-segments based on risk, ensuring that the collection treatments are delivered individually, one customer at a time.
For its efforts, Toyota Financial Services has been awarded the 2015 FICO Decision Management Award for Debt Management. “The panel of judges was impressed by how Toyota Financial Services aligned its collections program with its corporate customer service philosophy,” said Philip Alexander, editor, Global Risk Regulator, one of the judges for the FICO Decision Management Awards. “Rather than a tactical approach to collections, they are pursuing a long-term vision: to keep their customers in their cars.”
We’d like to thank Toyota for their submission, and our panel of independent judges:
- Philip Alexander, Editor, Global Risk Regulator Magazine
- Michael Versace, Global Research Director, IDC
- Joel Wells, Director Application Development, Discover Financial Services
- Michael Wu, Chief Scientist, Lithium Technologies