2016 Analytics 50 Honorees

Toyota Financial Services Analytics 50 Submission

Jim Bander, National Manager, Decision Science
Toyota Financial Services
Chandler, AZ
Industry: Auto Financing

Business Challenge

After the global financial crisis of 2007-08, Toyota Financial Services saw record numbers of customers falling delinquent on their auto payments. The company set three objectives for analytics: minimizing credit losses, controlling operating expenses, and improving market share by allowing the company to lend to a wider spread of customers. An important goal was to keep as many people in their vehicles as possible. Toyota needed to get better outcomes for its collection efforts, helping customers avoid repossession or credit impacts as a result of their delinquencies, while still profitably growing its lending portfolio. Toyota Financial Services needed to target the correct customers to most efficiently reduce delinquencies and keep the most customers in their vehicles.

Analytics Solution

Toyota turned to FICO for assistance. The partners combined statistical modeling, forecasting, predictive modeling and optimization into a single framework to develop a Collections Treatment Optimization (CTO) program that integrated decision management, reporting and advanced analytics for a data-driven, scientific and customer-centric approach to collections.

Impact

In its first year, the CTO program helped more than 1,700 customers stay in their cars and 10,000 customers avoid reaching a stage of delinquency that would affect their credit. Keeping delinquent customers in their cars and working out payment options has avoided millions of dollars in losses. It has also reduced the company’s operating expense ratio by allowing Toyota to grow its portfolio by 9% without adding collections headcount. Toyota can now tie future lending decisions to its collections abilities and put more customers behind the wheel of a Toyota.