Configuring the Business Formulas
Business Formulas processes different inputs from your digital journey in order to generate desired outputs. By inserting arguments and using them in steps, the system creates complex calculations to be triggered in a flow. For the Value-Added Marketplace Powered Lending, there are several formulas configured.
To determine the eligibility of a customer, the system compares the maximum Debt-to-Income
The Debt-to-Income ratio (DTI) is a personal indicator of a good balance between debt and income.
Monthly debt payment amount / Monthly gross amount (before taxes and other deductions). permitted with the new DTI, including the loan. The monthly installment of the three products are used to calculate the new DTI, as well as the Credit Bureau values:
- If the maximum DTI is bigger or equal to the new DTI, then the customer is eligible for the amount and period selected.
or
- If the maximum DTI is smaller than the new DTI, the customer is not eligible for the requested amount.
This verification is done for all three products from Banking Product Factory.
The Credit Bureau data and the FICO score are simulated. They produce random numbers, all above the limit for approval.
Business Formulas
This is where you build business formulas based on your business needs. These are the formula names used in this solution:
| Name |
|---|
| Scoring |
| RetailLoanFinancialAnalysis |
| PMTCalculation |
| MaxOffer |
Formula Steps
Steps allow you to process a formula in successive stages and to use the output from a step as an input argument in subsequent steps. For each of the formulas below one or more steps were created.
ScoringThis formula calculates the scoring of a customer based on the following information: Age; Marital Status; Employment Status; the number of Active Loans inserted by the customer. If the applicant score is lower than the approval threshold, the application for a loan is rejected.
| Name | Master Type | Subtype | Calculation Type |
|---|---|---|---|
| SCORE_Age | Simple Type | Whole Number | Normal |
| SCORE_MaritalStatus | Simple Type | Whole Number | Normal |
| SCORE_EmploymentStatus | Simple Type | Whole Number | Normal |
| SCORE_WorstDeliquency | Simple Type | Whole Number | Normal |
| SCORE_TimeAtCurrentEmployer | Simple Type | Whole Number | Normal |
| SCORE_ActiveLoansNo | Simple Type | Whole Number | Normal |
| ApplicationScore | Simple Type | Whole Number | Normal |
| FICOScoreDecision | Simple Type | Text | Normal |
| ApplicationScoreDecision | Simple Type | Text | Normal |
| Decision | Simple Type | Text | Normal |
RetailLoanFinancialAnalysisThis formula analyzes the financial situation of the customer and defines the decisions to approve or fail the application.
| Name | Master Type | Subtype | Calculation Type |
|---|---|---|---|
| ClientCategory | Simple Type | Text | Normal |
| MaxDTI | Simple Type | Decimal | Normal |
| DTI | Simple Type | Decimal | Normal |
| Decision | Simple Type | Text | Normal |
PMTCalculationThis formula calculates the PMT, calculating the monthly payment: principal and interest required to settle a loan or an investment with a fixed interest rate over a time period.
| Name | Master Type | Subtype | Calculation Type |
|---|---|---|---|
| calculation | Simple Type | Whole Number | Normal |
MaxOfferThis formula calculates the value of the maximum offer a customer can get.
| Name | Master Type | Subtype | Calculation Type |
|---|---|---|---|
| maxInstallment | Simple Type | Decimal | Normal |
| loanAmount | Simple Type | Decimal | Normal |
Formula Input
Formula arguments are the entity's attributes which hold a single value (be it simple or collection) which is used as input for the formulas and their steps presented above.
Arguments
ScoringArguments used for Scoring:
| Argument | Master Type | Formula Argument Sub-Type |
|---|---|---|
| activeLoansNo | Simple Type | Whole Number |
| age | Simple Type | Whole Number |
| employmentStatus | Simple Type | Whole Number |
| FICOScore | Simple Type | Whole Number |
| maritalStatus | Simple Type | Text |
| timeAtCurrentEmployer | Simple Type | Whole Number |
| worstDeliquency | Simple Type | Whole Number |
PMT calculationArguments used for PMT calculation:
| Argument | Master Type | Formula Argument Sub-Type |
|---|---|---|
| interestRate | Simple Type | Decimal |
| loanAmount | Simple Type | Decimal |
| numberOfMonthsOfPayments | Simple Type | Whole Number |
RetailLoanFinancialAnalysisArguments used for the analysis:
Name | Master Type | Formula Argument Sub-Type |
|---|---|---|
| applicationScore | Simple Type | Whole number |
| creditCardLimits | Simple Type | Decimal |
| currency | Simple Type | Text |
| income | Simple Type | Decimal |
| interestType | Simple Type | Decimal |
| loansMonthlyPayment | Simple Type | Decimal |
| scoringDecision | Simple Type | Text |
MaxOffferInput Arguments used for the maximum offer are:
Name | Master Type | Formula Argument Sub-Type |
|---|---|---|
| income | Simple Type | Decimal |
| interestRate | Simple Type | Decimal |
| maxDTI | Simple Type | Decimal |
| monthlyPaymentsForCreditLimits | Simple Type | Decimal |
| otherInstallments | Simple Type | Decimal |
| tenor | Simple Type | Whole Number |
Data sets
Data sets are mappings that associate values for a set of discriminants (such as age, marital status, etc.) to values for a specific metric. Here are the data sets that are in the package.
| Name | Formula in which its is used |
|---|---|
| SCORING_EmploymentStatus | Scoring |
| ApplicationScoreDecision | RetailLoanFinancialAnalysis |
| SCORING_Age | Scoring |
| SCORING_MaritalStatus | Scoring |
| SCORING_ActiveLoansNo | Scoring |
| MaxDTI | RetailLoanFinancialAnalysis |
| FICOScoreDecision | Scoring |
| FINCALC_ClientCategory | RetailLoanFinancialAnalysis |
| SCORING_TimeAtCurrentEmployer | Scoring |
| SCORING_WorstDeliquency | Scoring |
For more details, see Business Formulas.