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).