I am trying to build a prediction model that utilize the huge transaction database of all the customers of a bank. My dataset currently looks like this:

 transaction_date   customer_id   transaction_key  transaction_amt   cleaned_transaction_description
1       2017-03-22     137            AA_15          -50.00       ATM withdrawal
2       2017-03-30     129            AA_15          -50.00       ATM withdrawal
3       2017-03-14     142            AA_07         -100.00       grocery store Y
4       2017-03-20     120            AA_07          -30.00       clothing store X
5       2017-03-03     129            AA_07         -200.00       Pharmacy Z
6       2017-03-16     140            AA_20          -78.31       SEPA transaction

So, from a dataset like this, I am supposed to create variables, that could be used in a model that predicts the probability of default on a customer loan. So far I created variables like:

  • balance - the average net sum of all credits and debits for the customer ID
  • gaming - the average monthly sum of money spent on betting/gambling
  • stornos - the average monthly sum of declined payments (due to the lack of funds)
  • ATM to all - the average monthly ratio of ATM withdrawals to all the money spent
  • fines - the average monthly spending on fines

As can be seen, most of the variables were created from the transaction description. I cannot think of more variables that I could create, and it seems like a waste of potential of the dataset. Can you think of more variables, that would indicate a "bad/irresponsible" customer?


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    $\begingroup$ Just thinking out loud, sudden increase is medical expenses might be a predictor. Also frivolous expenses like eating at restaurants (more general than gaming/gambling). $\endgroup$ – Dimitri Vulis Sep 16 '19 at 13:53
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    $\begingroup$ I would look for regularity of the salaries and size of it, number of days under warning limits per month, total number of transactions per months, size of customer history (new may be riskier) for first shot :) $\endgroup$ – Mayeul sgc Sep 16 '19 at 14:46
  • $\begingroup$ These transactions are located in Europe, so the medical expenses will be much harder, even impossible to locate. Frivolous spending is a good idea, as well as amount of transactions per month, thanks! $\endgroup$ – PK1998 Sep 17 '19 at 7:43

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