Disinvestments Predictive Model in the Banking sector

The churn rate, also known as the rate of attrition or customer churn, is the rate at which customers stop doing business with an entity. It is most commonly expressed as the percentage of service subscribers who discontinue their subscriptions within a given time period. It is also the rate at which employees leave their jobs within a certain period. For a company to expand its clientele, its growth rate (measured by the number of new customers) must exceed its churn rate. This phenomenon applies in the bank industry in two different ways: - we have clients churn, well described before, it’s simply the process that sees the departure of a client who closes every link with the previous bank to open a new bank account and any other product with a new institute - We experience also what is called the Money-Churn, the phenomenon of disinvestments from investing funds for any reason. More than ever this last process has been controlled and analyzed due to the medical and economic situation that we are experiencing since March 2020. Covid19 has changed the customers' relationships with their own bank, long quarantine periods have increased the need for liquidity and the fear for the performance of financial markets. Many banks have seen large amounts of capital come out of their pockets for these reasons without being prepared to respond effectively. Obviously, no one was equipped for the scenario that suddenly emerged but once again: 'Life is 10% what happens to me and 90% how I react to it'. I am proud to say that I am part of a banking group that from the very beginning has been at the service of its customers, creating opportunities and immediate help for those most affected by the consequences of this pandemic. What is described in this report is a process of building a system to flag up those clients most at risk of disinvestment and this is just a small part of a much larger project that will be called “Close to the Client” in which other teams such as product development, commercial marketing and management control will be involved. What my manager and I did, was to create a predictive model that would help us find customers who were living difficult financial and economic difficulties.