For Scotiabank's credit card portfolio, should we focus on increasing cashback rewards to drive usage or implement stricter approval criteria to reduce default risk?

Introduction

Scotiabank should not choose between richer cashback and stricter approvals as if they were interchangeable portfolio levers. Underwriting determines whether and on what terms the bank extends credit; rewards influence usage after an eligible customer has been approved. Set approval policy within the bank's risk appetite, consumer-protection duties, and fair-access requirements first. Then evaluate reward changes for approved accounts on risk-adjusted customer and portfolio value.

Verified context and interview assumptions

• Current product context: Scotiabank publicly offers several cash back credit cards with different fees, rates, benefits, and eligibility descriptions. A recommendation must identify the card, customer population, and reward mechanic rather than assume one portfolio-wide offer.
• Risk governance: OSFI says a federally regulated financial institution's Risk Appetite Framework should guide risk-taking and set forward-looking parameters and limits. Approval policy cannot be optimized only for acquisition or short-term revenue.
• Consumer protection: FCAC says banks must assess whether products are appropriate for a customer's financial needs, obtain express consent, and avoid false or misleading information or undue pressure under the Financial Consumer Protection Framework.
• Fair access: The Canadian Human Rights Commission explains that discrimination can be indirect and uses a bank lending rule that disadvantages new immigrants as an example. Legal and compliance teams must define the applicable fairness review.
• Interview premise: No internal approval, default, profitability, or rewards-performance figures are public case facts. Scotiabank's 2025 Annual Report provides company-level risk and expected-credit-loss context, not the decision data for a specific card cohort.

Step 1

Clarifying Questions (3 minutes)

• **Which decision and population?** Is this a new-card acquisition offer, an ongoing earn-rate change, a retention offer, or an underwriting-policy review?

Why it matters: Each acts at a different lifecycle stage and has a different eligible population. Ask for: Card product, channel, geography, customer eligibility, current terms, proposed change, and decision owner.

• **What problem is observed?** Is usage weak, risk-adjusted contribution declining, losses above appetite, or approval outcomes creating access or fairness concerns?

Why it matters: A reward change cannot repair a miscalibrated credit policy, and stricter approvals cannot explain low use among already-approved customers. Ask for: Application, approval, activation, spend, repayment, delinquency, loss, complaints, and retention trends by mature cohort.

• **What constraints are binding?** Which risk limits, capital and expected-loss measures, affordability or suitability controls, and fairness reviews apply?

Why it matters: These constraints define the feasible decision set before growth optimization begins. Ask for: Approved risk appetite, policy limits, model documentation, protected-group review process, and finance's contribution methodology.