Case Study: The Co-operative Bank achieves 45% improvement in profit per application with FICO Custom Decision Optimization

UK Bank uncovers profit niches with optimized pricing

The Co-operative Bank, serving over 6 million UK customers, faced shrinking margins and regulatory limits on risk‑based pricing that constrained its ability to grow revenue from new-to-bank personal loans. Increased competition, affordability concerns, regulatory reviews of add-on products and rising early repayments made it difficult to sustain portfolio profitability under the bank’s existing pricing and accept/decline rules.

Using FICO Custom Decision Optimization the bank built an action-effect decision model to optimize accept decisions, loan amounts and pricing, running the optimized strategy on 50% of applications. Within 16 months the approach achieved break-even in year one and delivered about a 45% improvement in forecast profit per application (with accept and loans-opened rates up ~12%, blended risk‑based price up 16%, early repayments down 3% and no change in bad rates); three‑year ROI on 50% coverage is projected around 250%.

The Co-Operative Bank

Howard Price

Head of Credit - Retail Bank