Why has TVS Credit's two-wheeler loan approval rate dropped by 15% in the last quarter?

Introduction

TVS Credit's two-wheeler loan approval rate has dropped by 15% in the last quarter, signaling a significant issue that requires immediate attention. This decline could have far-reaching implications for the company's revenue, market share, and customer satisfaction. To address this problem, I'll employ a systematic approach to identify, validate, and resolve the root cause while considering both short-term fixes and long-term strategic implications.

Step 1

Clarifying Questions (3 minutes)

• Looking at the timing, I'm thinking there might be seasonal factors at play. Has this 15% drop been adjusted for typical quarterly fluctuations?

Why it matters: Seasonal trends could mask underlying issues. Expected answer: Yes, this drop is beyond typical seasonal variations. Impact on approach: If seasonal, we'd focus on optimizing for cyclical demand.

• Considering recent economic shifts, I'm curious about the overall market trends. Has the two-wheeler loan market as a whole experienced similar declines?

Why it matters: Distinguishes between company-specific and industry-wide issues. Expected answer: The market has seen a slight decline, but not as significant as 15%. Impact on approach: If industry-wide, we'd focus on competitive differentiation.

• Thinking about internal changes, have there been any recent modifications to the loan approval criteria or process?

Why it matters: Identifies potential internal causes for the decline. Expected answer: Some minor updates were made to the credit scoring model. Impact on approach: If confirmed, we'd scrutinize these changes and their impact.

• Considering user behavior, has there been a shift in the demographics or credit profiles of loan applicants?

Why it matters: Changes in applicant pool could explain approval rate fluctuations. Expected answer: There's been a slight increase in applications from younger, first-time borrowers. Impact on approach: If confirmed, we'd analyze how to better serve this segment.

• Thinking about data integrity, can we confirm that the loan approval rate metric definition and measurement system have remained consistent?

Why it matters: Ensures we're comparing apples to apples across quarters. Expected answer: Yes, the metric definition and measurement system are unchanged. Impact on approach: If inconsistent, we'd need to recalculate using a standardized method.