Experian Public Sector

Experian Public Sector Making effective use of data to aid collection 30 th June 2009 Experian Limited 2009. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Limited.

Changing face of debtors 2008 serious financial difficulty i.e. decrees and bankruptcy Over burdened Up 18% Low income 18% rise Young, Working Class 29% increase Experian Limited 2009. All rights reserved. 3

Changing face of debtors Significant change in debtor profiles. Corporate Chiefs 36% rise Very wealthy, corporate executives, metropolitan suburbs Just Moving In Jet Set 40% increase Highly affluent, dependent on global economy 153% CCJ/Decrees, 65% BR Go-getters, highly leveraged, aspiring wealthy Professions 50% rise Well educated, Law, media, Investment banking Experian Limited 2009. All rights reserved. 4

UK Economy Lending Overview bn - unsecured 140 120 100 80 60 40 20 0 Jan-06 Feb-06 Mortgage applications declining sharply Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 UK Consumer Credit Total Outstandings ( bn) Individuals resorting to increased use of CC/Overdraft Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 Personal Loan Credit Card (Active) Mortgage Total Cure rates declining rapidly May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Consumer Credit encompasses Unsecured Retail Credit, Credit Cards (limit), Personal Loans, Overdrafts, Unsecured Bridging Loans, Hire Purchase, Budget Accounts and Credit Sale Agreements. Source: Bank of England, the value of outstandings from September onwards have been affected by businesses restructuring and the transfer of a company. adjusted number not available. Outstanding at End of Period, New Lending during period Experian Limited 2009. All rights reserved. 6 1400 1200 1000 800 600 400 200 0 bn - secured / total Outstandings for secured mortgages are levelling as remortgage new business continues to decrease. More consumers are now paying off capital. Personal Loan outstandings have been relatively stable, despite a reduction in approval rates and average loan terms/values, with a reduction in recycling and topping-up. Credit Card outstandings (on active cards) continued to rise throughout 2008 with an acceleration in H2.

Direct Debit research DD volumes on the increase (4% increase YoY) Attitudes to DDs positive (74% positive) Recession impact 5% using less (mainly in utilities) 3% stopped using 27% using it more! Some evidence that DDs failing (insufficient funds) across all sectors Experian Limited 2009. All rights reserved. 7

Trends in the UK finance industry Financial institutions are tightening up on new business assessment, however, this is being offset by increased customer management (preventative) & collection (remedial) activity Collections now being seen as a more competitive environment Public sector payments seen as low priority by many customers Investment in strategic approach to collections is becoming key as the increased manpower approach fails to tackle the problem Investment in automation tools for collection strategies Intelligent use of data and better segmentation required to target appropriate collections actions Experian Limited 2009. All rights reserved. 8

Key challenges Experian Limited 2009. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Limited.

Key challenges for Local Authorities 1 Huge growth in number of accounts Surge in consumer indebtedness increases the risk of non payment with increased numbers of customers requiring attention 2 Demanding efficiency targets Current settlement requires a saving of 3% per annum, will future demands require increased cost and resource savings? Revenue 6 4 One size fits all Compliance & protection processes public scrutiny Increasing Corporate Fails to address the individual needs & behaviours of the customer reducing recovery effectiveness 5 Changing demands & influences require speed of response 3 Recovery vs social responsibility Court, admin & sheriff costs all add to the debt burden debt burden impacts upon revenue availability for other core services Experian Limited 2009. All rights reserved. 10

Who are you competing with for payment? First come first served is more true than ever Automotive Increased shortfalls Public Sector Revenue protection Insurance Cancelled or missed premiums Utilities De-priotisation of payment Telcos Increased attrition Financial Services Delinquency All industries are suffering from non-payment in one form or another, its just not called collections Experian Limited 2009. All rights reserved. 11

How can local authorities respond? Reduce the problem Specific prevention activities Who is at risk What actions When to take them How to deploy Rapid warning of risk & indebtedness changes Ability to interpret results Early collections activity Initiatives Experian Limited 2009. All rights reserved. 12

How can local authorities respond? Know their customer Specific prevention activities Know their customer better Who is at risk What actions When to take them How to deploy Who they are Where they live How to contact Personal status Better quality and use of internal data Exploitation of external intelligence Increased accuracy & value of tracing Initiatives Experian Limited 2009. All rights reserved. 13

How can local authorities respond? Understand the situation Specific prevention activities Who is at risk What actions When to take them How to deploy Know their customer better Who they are Where they live How to contact Personal status Deeper understanding of debtor behaviour Total exposure & indebtedness True ability to pay Propensity to respond More predictive collections & indebtedness scores Incorporate external view at point of interaction Initiatives Experian Limited 2009. All rights reserved. 14

How can local authorities respond? Use the insight Specific prevention activities Know their customer better Deeper understanding of debtor behaviour Forensic Targeting of customers Who is at risk What actions When to take them How to deploy Who they are Where they live How to contact Personal status Total exposure & indebtedness True ability to pay Propensity to respond Increased granularity of segmentation Individualised & differentiated treatment strategies New profiling techniques Data-driven segmentation Champion challenger Initiatives Experian Limited 2009. All rights reserved. 15

How can local authorities respond? Deliver efficiencies through targeted automation Specific prevention activities Know their customer better Deeper understanding of debtor behaviour Forensic Targeting of customers Who is at risk What actions When to take them How to deploy Who they are Where they live How to contact Personal status Total exposure & indebtedness True ability to pay Propensity to respond Increased granularity of segmentation Individualised & differentiated treatment strategies Automated, informed Interactions Automated decision making, assessments, treatment definition and execution Driving informed, context sensitive conversations Consistent and auditable customer experience Initiatives Experian Limited 2009. All rights reserved. 16

Core components of an effective collections system Data Scores Decision systems Workflow MIS Internal automated Data # Accounts payers Non payers External Score Data manual Test & learn / adapt to changing circumstances Experian Limited 2009. All rights reserved. 18

Core collection components - Data Data issues Changes in in customer situations Data security Single customer view Customer data Data access/ extraction Old or or missing customer data General principals Invest time and resources to ensure customer data quality is of a high standard Verify and validated data Augment data with focussed cleansing routines Use all available, including that specifically legislated for Local Authorities, e.g. Citizen View credit stress Periodically review data held and flag issues or trigger cleansing Data capture a combination of internal processes, staff awareness and external enrichment Collection success driven by accuracy of data Traced Cleansed Promise Rate Right Party Contact Compliance Data quality & integrity Experian Limited 2009. All rights reserved. 19

Data Driven Services Single Person Discount Reviews Utilising up to date data sources Validates residency status and household make-up Instantly identifies potentially inaccurate and fraudulent claims Paperless Timely Cost effective Creating a picture of the residency make up at an address 339 million linked addresses 5.7 million deceased records on the Mortality File 1 billion records on the UK adult population Up-to-date Electoral Register 420 million Credit Account Informatio n Sharing (CAIS) accounts 200 million searches each year on previous credit applications Experian Limited 2009. All rights reserved. 20

Data Driven Services Tracing Forwarding Address Living As Stated Address Monitoring Identify a forwarding address Establish they are living as stated Constant review Experian Limited 2009. All rights reserved. 21

Core collection components Scoring Prioritisation and segmentation The implementation of scoring systems is now universally recognised as the key to optimised collections One size fits all collection activities fail to address differing customer behaviours Risk Propensity to pay indicators Monitoring for future compliance Identifying customers with worsening debt Monitoring for key risk events to identify changes in key risk variables Collections Allocation to collections resource Prioritisation of debt collection Optimal message and tone to communicate to the customer Optimal tool for communicating with the customer, e.g. letter, telephone, text When to litigate or enact enforcement Affordability Property equity Monthly arrangement amounts Lump sum calculations Experian Limited 2009. All rights reserved. 22

Collections Score collates data into predictive metrics # Accounts Recovery Rate by Score 100% payers 90% 80% Non payers Recovery Rate 70% 60% 50% 40% Score 30% 20% At reminder stage the collection strategy could also be tailored to the individual 10% 0% <=100 101-200 201-300 301-400 401-500 501-600 601-700 701 + Score Pre Summary Warrant Strategy = Concern approach Standard approach Standard approach Remind SMS Experian Limited 2009. All rights reserved. 23

Utilising prioritisation and segmentation within council tax debt recovery Score used to determine self cure, hardship case, or enforcement case Summary Warrant Debt less than 100 Payment Arrangement made Means enquiry Letter warning of Recovery action No Forwarding Address for customer Small balance letter Make no payment, or Fail to pay as arranged Score used to Internal determine trace collections action Pay in full or Arrangement made Consider write Off depending On circumstances Pay as arranged Default Letter Sheriff visit Costs added to bill Address found Address not found Result depending On circumstances External trace Costs added to bill Address not found Experian Limited 2009. All rights reserved. 24

Collections proposition Council tax debt recovery current practice Customer Understanding Liability Assessment/ Bill 1 st st Pymt/ 2 nd nd Pymt Reminder Summons Summary warrant/ 14 14 Day ltr ltr CT/ NDR Billing System Pre sheriff sheriffs Recovery/ Committal Finance CitizenView Debtor Tracing CitizenView Debtor Tracing DD Review CitizenView Telephone Numbers CitizenView Telephone Numbers SPD Review CitizenView Full Financial Experian Limited 2009. All rights reserved. 26

Collections proposition Council tax debt recovery future vision Customer Understanding Which accounts will miss or struggle to pay & how can I help them? Data cleanse Which accounts should I prioritise? Liability Assessment/ Bill Benefit understanding 1 st st Pymt/ 2 nd nd Pymt Reminder Summons summary warrant/ Notification/ 14 Summons Where is the Notification/ 14 Day ltr ltr customer & what CT/ is NDR the best Billing way to System contact them? Debtor Tracing Pre sheriff sheriffs How do I manage my sheriffs & when should I cut my losses? Recovery/ Committal Debtor Tracing Finance Customer Comm Preferences Single Person Discount Empty Properties Contact Data Appends What actions do I take, at what time & with what Scoring & segmentation codes intensity? Contact Data Appends How could I improve my loss provisioning? DD Review Scoring & segmentation codes Business Risk Decision Support Decision Support SPD Review DD Promotion Property Valuations Empty Properties DD Verification Operational Review Collections Business Review Experian Limited 2009. All rights reserved. 28

Core collection components Workflow Decision Support Informing the conversation between the collector and the customer with: Up to date information Intelligence and analytics Delivering & developing best practice models and routines that can help to introduce consistency and maximise recovery rates Avoiding the need for substantial IT modifications within client environments Experian Limited 2009. All rights reserved. 29

Summary Experian Limited 2009. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Limited.

Tactical Help Trace debtors Understanding of individuals/households Informing debt recovery action at point of contact Distinguish between can t and won t pay = efficiency, front line support Provide employer contact details = Attachment Provide Bank Account details = Arrestment Provide Property valuations + Mortgage debt = Charging Order Identify benefit fraud = release cash Verify SPD claims and empty properties = release cash Direct Debit campaigns Target new potential DD payers Develop loyalty/retention schemes Ensure DD success Experian Limited 2009. All rights reserved. 32

Strategic/Operational Help Business process review Collection scores Collection systems Closed User Group (Scotland Summary Warrants) Proof of concept/trials Experian Limited 2009. All rights reserved. 33

Experian Public Sector Making effective use of data to aid collection 30 th June 2009 Experian Limited 2009. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Limited. Other product and company names mentioned herein may be the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian Limited.