Sirota E.N.Financial University under Government of Russian Federation, Moscow, Russian Federation ENSirota@fa.ru
Importance The article analyzes banks' procedures for interacting with clients as part of consumer lending and an effective bank-client communication mechanism as part of consumer lending and loan servicing. Objectives The system for bank's effective communication with clients should secure the bank's interests and borrowers. The research aims at elaborating a concept for bank's effective communication with borrowers through a game-theoretic approach. Methods Using the game-theoretic approach, we described the process of making a lending decision as a game of two or more actors having a zero score. Results When the consumer lending procedure is regarded as many individual matrix games of the Bank and the Borrower, we manage to articulate a three-phased game strategy for granting loans with the limited use of scoring components during the first stage, and substantiate it afterwards. To make the lending process more effective, we identified the need to review the second part of the process, i.e. loan servicing, using the game-theoretic approach. Conclusions and Relevance The proposed strategy will streamline the process as it reduces outlier scores of borrowers and personalizing amounts of loans. We also should expect loan servicing to become more reliable as scoring will focus mainly on the borrower's solvency.
Keywords: consumer lending, banks, game theory, matrix games, scoring
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