Why has Tala's loan repayment rate dropped by 15% in the last month for customers in Kenya?

Introduction

Tala's 15% drop in loan repayment rates for Kenyan customers over the past month is a critical issue that demands immediate attention. This analysis will systematically identify, validate, and address the root cause while considering both short-term and long-term implications for Tala's business in Kenya.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be a seasonal factor at play. Has this drop coincided with any major events or seasons in Kenya?

Why it matters: Seasonal factors could explain temporary fluctuations. Expected answer: No major seasonal events. Impact on approach: If seasonal, we'd focus on cyclical patterns; if not, we'd investigate other factors.

• Considering user segments, I'm wondering if this drop is uniform across all borrower types. Have you noticed any particular user segments more affected than others?

Why it matters: Helps pinpoint if it's a systemic issue or specific to certain groups. Expected answer: Higher impact on first-time borrowers. Impact on approach: Would focus on onboarding and risk assessment for new users.

• Thinking about recent changes, has there been any significant product update or policy change in the last 1-2 months?

Why it matters: Recent changes could directly impact repayment behavior. Expected answer: Minor UI updates, no major changes. Impact on approach: If changes occurred, we'd investigate their impact; if not, we'd look at external factors.

• Regarding performance metrics, has there been any change in how repayment rates are calculated or tracked?

Why it matters: Ensures we're comparing apples to apples in our data analysis. Expected answer: No changes in calculation methods. Impact on approach: If changed, we'd need to recalibrate our analysis; if not, we can proceed with historical comparisons.