A credit assessment mechanism for wireless telecommunication debt collection: an empirical study

The wireless telecommunication market in Taiwan is now saturated. As the competition between wireless service carriers intensifies, retaining customers becomes more difficult. To prevent companies from increasing bad debt and experiencing customer churn, this study aims to apply data mining method to build a credit assessment mechanism that can effectively evaluate customer credit risks and help wireless service carriers to enhance the quality of debt collection processes by customizing collection strategies for various customer groups. The application of the proposed mechanism to related problems in a wireless telecommunication company in Taiwan has shown satisfactory effectiveness, accounting for a savings of $2 million of a total $500 million annual revenue. A mere 0.4 % savings is significant, given that wireless service carriers in Taiwan typically allocate 2–4 % of their revenue to uncollectible debts.