Improving the predictive accuracy of the cross-selling of consumer loans using deep learning networks

Abstract

AbstractTraditionally most cross-selling models in retail banking use demographics information and interactions with marketing as input to statistical models or machine learning algorithms to predict whether a customer is willing to purchase a given financial product or not. We overcome with such limitation by building several models that also use several years of account transaction data. The objective of this study is to analysis credit card transactions of customers, in order to come up with a good prediction in cross-selling products. We use deep-learning algorithm to analyze almost 800,000 credit cards transactions. The results show that such unique data contains valuable information on the customers’ consumption behavior and it can significantly increase the predictive accuracy of a cross-selling model. In summary, we develop an auto-encoder to extract features from the transaction data and use them as input to a classifier. We demonstrate that such features also have predictive power that enhances the performance of the cross-selling model even further.