6.4.9 What-If Analysis
What-if analysis enables the user to generate a scenario and check the profitability of the account or the product at the rate that is obtained for that scenario. Scenario Analysis is made available to the user where the rates can be adjusted and the profitability metrics corresponding to each scenario will be returned, or vice versa. For an account priced using the Carded Methodology, the user can choose different rates that the customer is eligible for from the drop-down and get the profitability metrics corresponding to that rate. By default, the system generates the rates that the user is eligible for and the user can only select a value from the drop-down rates.
Using What-if analysis, the user can edit the values of the parameters in the P&L statement. The values that are changed affect the dependent variables accordingly and a new scenario is created. Along with the variables in the P&L statement, the user can edit the offered interest rate at the product level.
- Interest Rate
- Transfer Pricing Credit
- Transfer Pricing Charge
- Origination Fees
- Fees
- Annual Fees
- Other Income
- Operating Expenses
- Expected Loss
When a new scenario is generated through the What-if analysis, the target parameters for that scenario also change accordingly. The new values of target parameters should be displayed. When a scenario is created, the effect of the scenario is represented through a graph to indicate the net difference brought about in net income. The change in net income owing to the change that has been made is represented in a graphical format, thus highlighting the difference from the previous scenario.