Summary of "Moneyball" in Commercial Lending

From Art to Science in Pricing

Boston Consulting Group,

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Banks can add revenue by using statistical analysis to determine the right rate for every loan.

Rating

8 Overall

8 Importance

9 Innovation

8 Style

Recommendation

Fields as disparate as advertising, law enforcement and sports now rely on analytics to make decisions and set prices. Yet commercial lending remains an exception. According to Boston Consulting Group professionals Deepak Goyal, Sumitra Karthikeyan, Vikrant Kulkarni, Victor Noguera and Ian Wachters, a new analytics methodology could help banks capture greater profits. Aside from the authors’ error in identifying Billy Beane as the coach of the Oakland Athletics rather than the team’s general manager, their advice is flawless. getAbstract recommends this article to commercial bankers and borrowers interested in a new approach to setting lending rates and fees.

In this summary, you will learn

  • Why traditional methods of setting commercial loan rates fall short
  • How banks can integrate customers’ price sensitivity into the lending process
  • How the new approach can make an impact on the bottom line
 

Summary

As dramatized in the movie Moneyball, Billy Beane of the Oakland Athletics baseball team devised a new way to evaluate players based on statistics rather than scouting reports. The technique, considered unorthodox in 2002, is widely used in baseball today. In a similar vein, many businesses...
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About the Authors

Deepak Goyal et al. are professionals with the Boston Consulting Group.


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