Evaluate shift from branch to digital channel

Case study: OneMain credit card — branch vs. digital acquisition

OneMain operates a credit-card business that has two acquisition and servicing paths:

• Traditional (branch/local): customers are brought in and handled through physical locations.
• Digital: customers are brought in and handled through online or app channels.

Assume both channels are available in Year 1.

Q1) Strategy

Why might OneMain choose to reduce emphasis on or exit the traditional branch flow and move investment toward digital? Give a structured answer covering costs, revenue, risk, customer experience, scalability, and competitive dynamics.

Q2) Break-even channel mix (unit economics)

For Year 1, OneMain projects 100,000 total new card customers. Let $p$ represent the share acquired through digital, so the branch share is $1-p$.

Use the simplified economics below. All dollar amounts are per customer unless noted otherwise:

• Branch channel
  • Revenue: $200
  • Variable cost: $100
  • Contribution margin: $100
• Digital channel
  • Revenue: $200
  • Variable cost: $0
  • Contribution margin: $200
• Fixed costs (Year 1 total): $11,000,000, covering corporate overhead plus channel programs.

Task: Find the minimum digital share $p$ that lets OneMain break even (profit $\ge 0$) in Year 1.

Output:

• State the break-even digital share $p$ as a percentage.
• Show a clear profit equation.

Q3) Reasonableness check

If the required digital share is small (single digits), how should you interpret that result? Which assumptions could make it misleading?

Q4) How to increase digital share

If the company needs to reach or exceed that break-even digital share, propose a plan to raise digital adoption. Include:

• Levers across the customer funnel, from awareness → application → approval → activation.
• Pricing or offer strategy and referral or partnership ideas.
• The experiments you would run and the metrics you would track, including primary metrics and guardrails.

Q5) Risk implications

Relative to branch, does digital onboarding and servicing usually increase fraud risk, credit risk, or both?

• Define each risk type clearly.
• Explain the mechanisms that could raise or lower each risk.
• Propose monitoring metrics and mitigations across product, model, and operational controls.

Overview: The question tests a data scientist's skill in analyzing channel unit economics, designing growth experiments and metrics, and evaluating operational, fraud, and credit risk effects of moving credit-card acquisition from branch to digital.