Introduction
Balancing longer repayment terms to attract customers against increased default risk is a critical trade-off for Openpay. This scenario involves weighing customer acquisition and satisfaction against financial stability and risk management. I'll analyze this trade-off by examining the product, metrics, experimentation, and decision-making framework to provide a strategic recommendation.
I'll approach this systematically, starting with clarifying questions, then diving into product understanding, metrics, experimentation, and decision-making. My goal is to provide a balanced perspective that considers both short-term gains and long-term sustainability.
Step 1
Clarifying Questions (3 minutes)
Why it matters: Helps understand the urgency and competitive landscape Expected answer: We're facing increased competition from new entrants offering longer terms Impact on approach: Would influence how aggressively we need to adjust our terms
Why it matters: Establishes a baseline for risk assessment Expected answer: Default rates increase with longer terms, but not linearly Impact on approach: Would help calibrate the risk-reward balance of extending terms
Why it matters: Determines our ability to mitigate increased risk Expected answer: We have a basic model but room for improvement Impact on approach: Might suggest investing in advanced risk modeling alongside term extensions
Why it matters: Defines the boundaries for our risk-taking Expected answer: We're within industry standards but want to maintain or improve our position Impact on approach: Would set limits on how far we can extend terms
Why it matters: Influences the pace and scale of our experimentation Expected answer: We can implement changes within 2-4 weeks Impact on approach: Would determine how iterative our testing strategy can be
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