Is it more beneficial for Julo to invest in automated credit scoring algorithms or to expand our manual underwriting team for more accurate risk assessment?

Introduction

The trade-off between investing in automated credit scoring algorithms or expanding our manual underwriting team for more accurate risk assessment is a critical decision for Julo. This scenario involves balancing technological innovation with human expertise in the fintech lending space. I'll analyze this trade-off by examining the product context, potential impacts, key metrics, and experimental approaches to guide our decision-making process.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking our current credit scoring process might be a bottleneck. Could you share our current approval times and how they compare to industry standards?

Why it matters: Helps identify if speed or accuracy is our primary concern Expected answer: Approval times are slower than competitors Impact on approach: Would prioritize automation if speed is the main issue

• Business Context: Based on our growth targets, I assume we're looking to scale our loan portfolio. What's our target loan volume increase for the next year?

Why it matters: Determines the urgency and scale of the solution needed Expected answer: Aiming for 50-100% growth Impact on approach: Higher growth targets would favor automation for scalability

• User Impact: I'm curious about our customer satisfaction scores. How do they vary between fast approvals and thorough, manual assessments?

Why it matters: Helps balance speed vs. accuracy from the user perspective Expected answer: Higher satisfaction with faster approvals, but also higher default rates Impact on approach: Would need to find a balance between speed and accuracy

• Technical: Regarding our current tech stack, how mature is our machine learning infrastructure?

Why it matters: Affects the feasibility and timeline of implementing automated scoring Expected answer: Basic ML capabilities in place, but not fully integrated Impact on approach: Might need to factor in additional time and resources for tech development

• Resource: What's the current size and capacity of our manual underwriting team?

Why it matters: Helps assess the scalability of the manual approach Expected answer: Team of 20, operating at 80% capacity Impact on approach: Limited room for manual scaling might push towards automation