Balance collections with retention for each customer. Decision Analytics for debt management in retail banking

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1 Balance collections with retention for each customer Decision Analytics for debt management in retail banking

2 Debt management for retail banking In the highly competitive retail banking environment, banks are spending large marketing budgets to win new customers. Retail banks are able to automate and streamline the collections process to collect more debt from more customers. However, rising acquisition costs also mean that customer retention is key, with banks looking to prevent attrition and maximise the value of existing customers. The growth in the availability of credit over recent years has led to increasing numbers of banking customers becoming indebted across a number of different credit products. This has significantly impacted bottom line profitability as a result of increased provisioning, bad debt write-off and the increasing costs of collections activity. Banks have recognised that managing credit loss is a key driver of profitability. In the multi-product, and therefore multi-debt relationship, banks are facing up to the challenges of adopting a customer-centric approach to the management of arrears. Achieving a complete view of a customer s indebtedness enables early identification of those at risk and the deployment of dynamic, relevant collections activities. Experian has worked with retail banks around the world and uses this experience to deliver a Decision Analytics proposition that addresses the key debt management challenges. The proposition enables banks to minimise bad debt and rehabilitate customers rapidly, to reduce attrition and maintain revenue streams for the future profitability of the organisation.

3 The challenge Debt management Retail banks operate in an environment of mounting pressure and reduced profitability. While delinquency increases, regulators are demanding that the industry is seen to charge and collect fairly, affecting the ability of lenders to recover costs through penalty charges. Lenders who take a customer centric approach to debt management have a clear view of an individual s total exposure. This informs better and more consistent collections decisions and, combined with more automated processes for lower risk, lower value accounts, releases staff to work on higher value, higher risk cases, which enables more debt to be collected at a lower cost. Regulatory compliance Responsible lending is a key driver for retail banks, with substantial media coverage and many markets becoming more regulated. Lenders are required to prove that they are lending and collecting responsibly, forcing many banks to alter their models and approach. Additionally, the requirements of Basel II and the Sarbanes-Oxley Act have put reporting pressures on businesses, including in the collections environment, where it is key to be able to analyse and predict the level of risk associated with the debts of defaulting customers. The answer Experian offers a Decision Analytics answer to meet these challenges. It integrates segmentation and profiling of customers with automation of collections activities to create a complete proposition in retail banking. Sophisticated debt management can be deployed across every product a customer holds, including credit cards, mortgages, asset backed loans, unsecured lending and revolving credit activities, to drive dynamic, tailored collections strategies for each delinquent customer. Create customer profile and segment Customers are finely segmented according to a wide range of variables to create an accurate profile. Using behavioural scoring, each customer is assigned a risk score according to their customer profile and delinquency type, which is used to drive the most appropriate collections strategy. With customers holding multiple products, banks can deploy customer-centric collections activities, which closely match both the value of the customer and the overall credit risk they represent. Prioritise actions Using the profile, collections actions can be effectively prioritised, such as leaving habitual late payers to self-cure and focusing resources on high risk, high value customers. Automate manual processes Collections activities are automated on lower risk, lower value accounts to minimise manual intervention and enable staff to concentrate on higher value, higher risk collections. Banks can deploy modern communications technology within the collections process to enhance the speed and efficiency of collections. Using Debt Collection Agents and legal processes The allocation of debt to collections agents is managed and performance is accurately monitored to minimise commission payments. A comprehensive approach is provided for the use and management of legal processes, such as legal charges against debtors, court judgements or the repossession of property. Decision Analytics for debt management in retail banking

4 Meeting the challenges of debt management I need to improve collections efficiency I need to improve collections effectiveness I need to reduce the cost to collect Implementing a comprehensive debt management approach Use accurate assessment to determine and implement the appropriate approach, from in-house collection, outsourcing to DCAs and implementing legal processes. Enabling prioritised collections activities Use behavioural scoring and segmentation to dynamically create accurate and tailored collections activities according to the level of risk and value of the customer. Delivering automation, workload balancing and intelligent allocation Automate and streamline collections activities, enabling skilled collectors to be matched to the most appropriate cases. Minimise activity costs and time by taking the most appropriate action Maximise value from DCA activity Effectively use legal processes Improve recovery rates Increase cash flow Reduce bad debt write-offs Optimise collections activity Improve roll rates Reduce collections costs Decrease time to collect Improve staff productivity Reduce manual tasks Focus collections resources on high risk, complex cases

5 I need to maintain customer relationships Creating a focus on rehabilitation Use customer-level profiling to accurately assess and identify which subscribers should be retained and take action that balances recovery with the relationship. I want to achieve rapid return on the investment in a debt management solution Delivering an agile deployment Ensure the benefits of the solution are realised more quickly with an agile implementation. I want to continuously improve the efficiency and effectiveness of strategic debt management Deploying a value-added proposition Implement debt management capabilities specifically designed with built-in intelligence for the retail banking market. Protect future revenue streams Reduce churn Increase customer loyalty Realise business benefits faster Reduce risk with proven systems and practices Focus on value-added activities Reduce risk with proven systems and practices Adopt effective practices from leading organisations worldwide Decision Analytics for debt management in retail banking

6 Integrated products and services Consulting Consulting is at the heart of every Decision Analytics delivery by Experian. Consultants work with clients at every stage of the project, firstly to fully understand the business and strategic direction, and then to help design and implement systems and processes that deliver objectives. Following implementation, Experian consultants work with clients through a structured and regular review programme to continually evolve and enhance strategies so that organisations continue to gain maximum value as their needs change and the business grows. Experian creates a partnership with clients to deliver a system that addresses their business challenges for today, and in the future. Bringing a fresh approach and independent viewpoint to every business, it delivers practical solutions that deliver measurable results. Tallyman software Tallyman is the sophisticated software system for managing customer revenue and collection. Specifically designed for consumer credit grantors, or organisations which extend consumer credit as part of their business model, Tallyman provides its users with the necessary tools to implement fully integrated, end-to-end collections processes with flexible user applications and efficient automation. The key to Tallyman s ability to collect more revenue lies in its rulesbased architecture which underpins all the activities and functions. Rules can be as simple or as complex as required to ensure that the solution precisely meets requirements. Tallyman s workload targeting function assigns accounts to be manually worked or to be automatically processed by either a worklist or a route. Context sensitive displays mean that collections agents have all the relevant information at their fingertips to enable faster, more informed decisions. Management information Tallyman provides the ability to evaluate the performance of the implemented processes using visual, interactive, real-time performance dashboards and flexible and powerful management information through a suite of defined collections reports. Progress of work queues, value of revenue collected and the progress of payment arrangements can all be monitored against KPI targets. Using dashboard tools, managers can quickly predict daily outcomes and dynamically allocate resources and work queues in order to optimise system performance. Modular technology with flexible delivery options The system has been designed and built for agile implementation, with all the elements required for effective debt management, but with the ability to customise elements to suit individual business requirements. The functionality in the technology has been designed to be modular, so it can deliver the functionality needed today, and meet the needs of the business tomorrow. Tallyman is designed to integrate seamlessly with all leading billing and customer management solutions for streamlined operating efficiency. The fully-scalable system is capable of processing millions of customer decisions rapidly in this mission critical environment.

7 About Decision Analytics from Experian Decision Analytics is the international division of Experian specialising in providing credit risk and fraud management consulting services and products. For more than 30 years, it has developed its best practice analytical, consulting and product capabilities to support organisations to manage and optimise risk; prevent, detect and reduce fraud; meet regulatory obligations; and gain operational efficiencies throughout the customer relationship. With clients in more than 60 countries and offices in more than 30, the Decision Analytics division of Experian delivers experience and expertise developed from working with national and international organisations around the world across a wide range of industries and business size.

8 Experian The word EXPERIAN and the graphical device are trade marks of Experian and/or its associated companies and may be registered in the EU, USA and other countries. The graphical device is a registered Community design in the EU. All rights reserved.