The Impact of Emerging Technology on Portfolio Risk Management Michael Cochrum VP of Analytics and Advisory Services Michael.Cochrum@cudirect.com

Today How Data-Driven Decisions Can Save Your Job Autonomous Technology – Are hands free collections in our future? Uncle Cecl – Welcomed Guest or Unwanted Busy Body? What is TaaS and what does it mean for Auto Lending. How Data Anaytics will impact the future of our processes.

My Own Data Story – And Why I’m a Believer.

What Do Autonomous Technology Fully Autonomous Vehicles On the Road Worldwide What Do Autonomous Technology Trends Tell Us? 2030 2021 Technology Launch 2021 Driverless Vehicles to Market 2019 2020 Fully autonomous Tesla by 2018 2019 iNext Platform Launch 2021 2018 Autonomous Vehicle On the Road by 2020 Fully Autonomous Mobility Services by 2021

Does Computer Aided Decision Making Reduce or Increase Risk? Daniel Kahneman Psychologist Nobel Prize Winner Author: Thinking, Fast and Slow. Scientific studies have proven, fact or data-driven decision are better than intuition.

You Make the Call A B Credit Score 720 610 LTV 100% 80% DTI 50% 30% PTI 30% 20% Net Yield 1.58% 1.78%

Can We Make Collections Autonomous? Better predict who is going to fall delinquent Better determine which accounts should be prioritized Decide which tools work with which debtors. Identify opportunities to assist members – before they are in hot water.

“Uncle CECL” – Welcomed Part of the Family or Unwelcomed Guest?

Core Concepts Predicting Losses and Loan Origination More granular approach to risk assessment Provides a more accurate assessment of Current Risk It’s really the way we should be doing business

Problem: Imputing most recent performance on immediate performance.

Solution: Factoring Credit Risk Characteristics and External Data into default probability.

What happens when we don’t “Buy” cars anymore?

Impacts of MaaS Attitudes on Vehicle Ownership and Collateral Value? Rapid pace of technology improvements may make used vehicles obsolete – Think, what do you do with your old cell phone? Transportation option becomes an app that connects to multiple services with one payment network. Transportation becomes more accessible and affordable. Will change (is already changing?) how consumer’s pay for transportation.

Impact of employment on vehicle sales with product model Impact of Service-based model on Smart Phone sales during same period

Questions? Michael Cochrum VP of Analytics and Advisory Services Michael.Cochrum@cudirect.com