The client identified four key reasons why their Australian home loan customers closed their accounts: internal refinancing, property retention, property selling and external refinancing.
In 2013, 20% of this client’s home loan closures were due to external refinancing with another institution, amounting to nearly $6 billion (Australian).
To reverse this downward trend, the client wanted to proactively identify which customers were most at risk of refinancing their home loans with other institutions so that they could take steps to retain those accounts.
Fractal Analytics developed an attrition solution, based on the Cox proportional hazards model, to identity which accounts were likely to externally refinance their home loans in the coming year. The model:
Fractal’s attrition model helped our client identify which customers were most likely to refinance with another institution each month so that they could take appropriate proactive action.
The customer’s life stage, loan balance and additional interest paid were all key predictors impacting their decision to refinance with a different institution.