The Bank Loan Report dashboard provides a comprehensive view of the total loan applications, funded amounts, amounts received, and key metrics such as interest rate and Debt-to-Income (DTI) ratio. It highlights the performance of both good and bad loans, categorized by various factors like loan grade, purpose, and term. The dashboard also offers insights into loan applications based on state, employee length, and home ownership status, helping financial institutions make informed decisions.
The objective of the Bank Loan Report dashboard is to analyze the loan application data and offer insights into the performance of loan types, customer segments, and geographical trends. The goal is to provide actionable intelligence for optimizing loan offerings, managing risks, and improving customer targeting.
1)Data Gathering: Collected loan application data, including details on loan purpose, grade, funded amounts, interest rates, and customer demographics.
2)Data Preparation: Cleaned and structured the data for analysis, ensuring all key variables were present and properly formatted.
3)Dashboard Design: Created a user-friendly dashboard in MS Excel that provides a high-level summary, detailed breakdowns, and various filter options to explore the data in multiple dimensions.
4)Visualization: Used bar charts, pie charts, and geographic maps to visualize trends in loan applications, funding, repayment, and demographic segmentation.
5)Insights Generation: Extracted key insights related to loan performance, customer profiles, and geographical distribution to inform business decisions.
1)High Loan Approval Rate (Good Loans):
Insight: 86.18% of total loans are classified as "Good Loans." These loans have a funded amount of $370.2M and have received $435.8M. The high percentage of good loans indicates strong borrower performance and effective loan approval processes. Actionable Insight: Continue with the current risk assessment models as they are efficiently filtering out high-risk applications.
2)Bad Loans Issued Are a Minority:
Insight: Only 13.82% of total loan applications result in "Bad Loans." The total funded amount for bad loans is $65.5M, with $37.3M received. This segment needs to be closely monitored to minimize further losses. Actionable Insight: Strengthen credit risk evaluation strategies for applicants flagged as higher risk to reduce the volume of bad loans.
3)Loan Purposes Reflect Consumer Needs:
Insight: Most of the loans issued are for purposes such as car purchases, credit card repayments, and debt consolidation, which indicates common borrower needs. Actionable Insight: Financial institutions should focus on providing tailored loan products that align with these high-demand categories, possibly by offering more competitive rates or better repayment terms for car and credit-related loans.
4)Interest Rates and Debt-to-Income (DTI) Ratio:
Insight: The average interest rate across all loans is 12.05%, and the average debt-to-income ratio stands at 13.33%. These indicators reflect relatively healthy lending conditions, though the DTI ratio should be watched closely to ensure borrowers are not becoming over-leveraged. Actionable Insight: Offer debt consolidation loans to borrowers with high DTIs to help manage their financial burden and improve loan performance.
1)Steady Increase in Loan Applications by Month:
Insight: Loan applications have grown steadily throughout the year, with December showing the highest monthly figure of 4.3K applications. The trend indicates increasing demand for loans, especially in the second half of the year. Actionable Insight: Prepare for seasonal surges by ensuring there are sufficient resources and staff to process increased loan applications, especially towards the year-end.
2)Geographic Distribution of Loan Applications:
Insight: Loan applications are highly concentrated in specific states, such as Texas and California. These regions represent major opportunities for loan growth, while some states show minimal loan activity. Actionable Insight: Focus marketing and loan product strategies in states with high demand, while researching why other states are underperforming. This could involve localized promotions or the introduction of new loan products tailored to regional economic needs.
3)Loan Terms Are Heavily Skewed Towards 60-Month Loans:
Insight: 60-month loans are more popular than 36-month loans, with 28.2K applications versus 10.3K, respectively. Borrowers may prefer longer terms for lower monthly payments. Actionable Insight: Consider offering more flexible loan products, such as 48-month terms, or incentivize shorter-term loans by offering lower interest rates to improve repayment speed and reduce long-term credit risk.
4)Loan Purpose Diversification:
Insight: The most common purposes for loans are credit card repayment (5K applications), home improvement (3.8K applications), and debt consolidation (2.9K applications). There is also a small but notable demand for niche purposes like vacation and renewable energy loans. Actionable Insight: Tailor promotional loan products for popular loan purposes such as home improvement and debt consolidation. Consider creating niche loan offerings for smaller segments like renewable energy and vacation loans to tap into emerging markets.
5)Employee Length Correlation with Loan Applications:
Insight: The largest segment of loan applicants comes from individuals with over 10 years of employment (8.9K applications), indicating that borrowers with stable, long-term employment are more likely to apply for loans. Actionable Insight: Target marketing towards long-term employees with specialized loan products, as they are more likely to be financially stable and responsible borrowers.
1)Target High-Performing Regions:
Action: Focus marketing and outreach efforts in states with higher loan application rates and better performance, such as Texas and California. Customized loan offerings could be promoted to regions with high loan uptake. Impact: This could increase loan originations in regions already demonstrating strong demand while optimizing resource allocation in lower-performing regions.
2)Optimize Loan Products for Preferred Terms:
Action: Given the higher popularity of 60-month loans, consider offering more flexible or competitive products for longer loan terms. Additionally, monitor and adjust interest rates for this term to attract more customers. Impact: It could lead to higher customer retention, especially among those looking for longer repayment terms, thus increasing overall loan revenue.
3)Enhance Risk Management for Bad Loans:
Action: Develop strategies to reduce the issuance of bad loans, such as tightening credit checks for loan applicants in lower-grade categories (e.g., Grades F and G). Introducing better risk assessment tools and stricter lending criteria could help reduce default rates. Impact: This would decrease the financial institution’s exposure to high-risk borrowers, improving overall profitability and reducing write-offs.
4)Refine Loan Offerings Based on Loan Purpose:
Action: Tailor loan products for popular loan purposes like debt consolidation and credit card repayment by offering competitive rates and customized repayment plans. For small businesses, provide loans with favorable terms to support entrepreneurship and economic growth. Impact: This can improve customer satisfaction by addressing specific financial needs while driving growth in loan portfolios for these popular categories.
5)Focus on Homeowners for Larger Loans:
Action: As homeowners tend to apply for larger loans and have better repayment rates, create specialized loan programs targeting homeowners, such as mortgage refinancing or home equity loans. Impact: Offering more attractive options for homeowners could increase loan volume while maintaining lower default rates, contributing to higher profitability and stable loan performance.
6)Leverage Employee Stability Data:
Action: Promote loan products to individuals with longer employment histories, as they tend to have a higher likelihood of repayment success. Offering premium services or discounts to long-term employees could also drive loyalty. Impact: This could reduce the institution's risk exposure and improve overall loan performance while fostering relationships with more financially stable borrowers.
7)Adjust Interest Rates for Better Customer Engagement:
Action: As interest rates show slight variation by loan category, consider dynamically adjusting interest rates to stay competitive, especially in the good loan segment. This could be coupled with seasonal offers or personalized rates for repeat customers. Impact: This strategy could attract new customers while retaining existing ones by providing attractive and personalized loan terms, leading to higher customer satisfaction and long-term loyalty.
The Bank Loan Report dashboard offers crucial insights into the loan landscape, highlighting growth areas and potential risks. With most loans performing well, especially in high-revenue states like Texas, financial institutions can optimize their strategies by focusing on good loans, targeting stable employee segments, and providing tailored products to homeowners and higher loan grades. The analysis of interest rates, DTI ratios, and demographic segments further supports data-driven decisions to enhance customer engagement and reduce risks.