Evaluate shift from branch to digital channel

## Business case: OneMain credit card — branch vs. digital acquisition OneMain runs a credit-card business with two acquisition/servicing flows: - **Traditional (branch/local)**: customers acquired and serviced via physical branches. - **Digital**: customers acquired and serviced via online/app. Assume both channels can be used in Year 1. ### Q1) Strategy Why might OneMain want to **de-emphasize or exit the traditional branch flow** and shift investment to digital? Provide a structured answer (costs, revenue, risk, customer experience, scalability, competitive dynamics). ### Q2) Break-even channel mix (unit economics) In Year 1, OneMain forecasts **100,000 total new card customers**. Let **p** be the fraction acquired via **digital** (so **1 − p** via branch). Assume the following simplified economics (all dollar figures are per customer unless stated 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** (covers corporate overhead + channel programs) **Task:** What is the **minimum digital share p** required for OneMain to **break even (profit ≥ 0)** in Year 1? Output: - Break-even digital share **p** (as a percentage) - A clear profit equation ### Q3) Reasonableness check If the break-even digital share is small (single digits), how would you interpret that? What assumptions could make it misleading? ### Q4) How to increase digital share If the company needs at least that break-even digital share, propose a plan to **increase digital adoption**. Include: - Customer funnel levers (awareness → application → approval → activation) - Pricing/offer strategy and referral/partner ideas - What experiments you would run and what metrics you would track (primary + guardrails) ### Q5) Risk implications Compared to branch, does digital onboarding/servicing typically **increase fraud risk and/or credit risk**? - Define each risk type clearly. - Explain mechanisms that could increase/decrease each risk. - Propose monitoring metrics and mitigations (product + model + ops controls).