Tag Archives: Account Management

Customer Engagement Getting Checking Fee Management Right

Jul192016

Fees are an important and often misunderstood part of checking accounts. Management of checking account fees is often scrutinized by regulatory agencies and the public. A review of the CFPB’s Complaint Database and the CFPB’s 2015 Consumer Response Annual Report shows the impact of poorly managed fee programs on consumers and the banking industry. How do you know if you are effectively managing fees? Ask yourself these questions: Are your policies easy to understand and consistently implemented by your front-line personnel? Is your fee waiver approach based on relationship and risk, or do you have a one-size-fits all approach to fee waivers and fee reversals? Are your policies easy to understand and consistently implemented? Let’s discuss the “easy to understand” part of this question first. The fee policies in place must be easy to understand for your customers as well as your staff. Your front-line employees should understand the fees that... [Read More]

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Customer Engagement Are You on the Right Path to Customer Experience Maturity?

May192016

In my last post, I discussed the eight disciplines critical for companies looking to improve their maturity in managing customer experience. With increased maturity comes a sustainable competitive advantage that is hard to duplicate. But it’s important to note that no company will excel in all eight disciplines, even top performers like Zappos and Disney. To lead in an industry, you only need to mature to a greater degree (and preferably earlier) than your competitors. One thing that can inhibit or promote the speed of a company’s maturity is the path taken. This path determines the disciplines in which they focus their energy, and the priority they put on these disciplines. And, unfortunately, there are no shortcuts. The diagram below is the order prescribed by FICO to optimize a company’s use of time and resources to increase maturity, based what works – and what does not work – with our... [Read More]

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Customer Engagement Video: Unlocking Deposit Account Profitability

Video - deposit account profitability
May122016

Are retail banks overlooking deposit accounts? Many may be missing out on higher profits and improved customer satisfaction because they aren’t taking the right analytic approach to the challenges they face—most notably, a complex regulatory compliance landscape and more competitive market environment. For many institutions, inconsistent fee waiver, or hold policies, are leading to higher customer attrition and missed profits. But with the right analytic tools and approach, these issues can be overcome to make deposit accounts more rewarding. In this video, Bruno Courbage, senior director at FICO, shares five ways that predictive analytics improve the decision-making process to unlock the profitability of your deposit accounts.

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Customer Engagement Fooled by Limited Customer Views? Never Say Never

Mar112016

Imagine if you had to rate your opinion of Justin Bieber on a scale of 1-10, but your knowledge of him was limited strictly to his album sales. Further, if you tried to do an online search of him, the only information returned to you would be his album sales. According to Billboard, the Biebs’ latest album, Purpose, hit #1 on the charts late last year. Not only that, it was his 6th album to make it to the top of the charts, and it sold the largest weekly unit total for an album since Billboard updated their tracking methodology in 2014. Based on that criteria alone, you’d probably have to give him a 10. Now imagine if the Biebernator showed up on your doorstep with his (possibly fake) eyeglasses, a full turtleneck covering all tattoos, and a totally normal hairstyle, AND he was asking to date your daughter. And... [Read More]

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Customer Engagement The High-Risk Game of Spotting High-Risk Customers

Basketball + High-Risk Customers
Mar032016

Regardless of industry, every business has to deal with high-risk customers or employees. If you can manage them correctly, the upside is tremendous. If not, they can potentially crater your operation. As a long-suffering Charlotte Hornets basketball fan, I’m all too painfully aware of this phenomenon. Last season, we (I am one of those insufferable fans who refers to his team as “we” as though I’m actually part of the team) took a chance on a high-risk player named Lance Stephenson by signing him to a multiyear contract. Lance (whom I refer to on a first-name basis even though we’ve never met, and I’m pretty sure we never will meet) was one of those guys with a checkered history in terms of on- and off-court performance, but who’d shown enough potential upside that it was worth taking the risk on acquiring him. I’d love to say that the gamble paid... [Read More]

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Customer Engagement Video: 20-25% Reduction in Auto Lender Delinquencies…Yes Please

Dec142015

Over the past two years, the total open balances of outstanding automotive loans has grown from $784B to $968B, up nearly 25% between Q3 2013 and Q3 2015 (source: Experian-Oliver Wyman Market Intelligence Reports). Couple that with the fact that the average term of the loans, the average amount financed and the average monthly payment are all increasing year over year, and it appears the auto lending market is heating up. There’s an unfortunate flip side to that coin: delinquencies. We’ve seen that using analytics to target potentially delinquent customers before they get into trouble is a good way to keep customers on track. Analytics can also help companies appropriately assign collection treatments to reduce losses and keep operational costs down. In this video, Tom Dehler, customer management segment leader at FICO, discusses how auto lenders can get 20-25% reductions in delinquencies.

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Risk & Compliance HELOC Resets: Here We Go Again?

Oct212015

In my last post, I shared new FICO research on home equity line of credit (HELOC) resets. The good news: after examining credit performance of HELOCs older than 10 years, we found little evidence that HELOC bad rates increase dramatically after their reset dates. However, our research uncovered a potential new concern: with the US housing market recovering, consumer appetite for HELOCs appears to be increasing again. Consider the current balances of HELOCs by the year booked: As house prices fell during the Great Recession, significantly fewer HELOC loans were booked. However, as house prices recover, consumers are once again taking advantage of these loans in large numbers, as shown by the increase in the blue line in the graphic above. In the past year, we find balances on HELOCs similar to what was booked in 2003. While recent HELOC growth is slightly less pronounced compared to the years prior... [Read More]

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Risk & Compliance HELOC Resets: Greater Risk on the Horizon?

Oct152015

In the run-up to the Great Recession, millions of US consumers borrowed large amounts via home equity lines of credit (HELOCs). Since these loans are about to hit their 10-year reset marks, I’ve been sharing research findings from our latest study on HELOCs. We’ve found good evidence that, after these HELOCs hit their reset dates, borrowers are indeed paying more and/or refinancing. This begs the question: do HELOCs that continue beyond their reset date have a drop in credit performance? In other words, are higher payments causing more borrowers to default on these loans? To answer this, we examined HELOC one-year delinquency rates (90 or more days past due) across three different points in time, comparing a recent timeframe to one at the height of the Great Recession and another prior to the recession. Here’s the recent snapshot: While bad rates start to increase around the fifth year of maturity,... [Read More]

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Risk & Compliance HELOC Resets: Cause for Concern?

Oct062015

Worries about widespread home equity line of credit (HELOC) resets have been growing slowly but steadily in recent years. Over the next few years, HELOCs granted to millions of US homeowners prior to the Great Recession will reach their 10-year mark, which is when the bulk of HELOCs “reset” – that is, they become closed-end loans, and any remaining balance must be paid off in the following years. When these lines of credit convert from interest-only to principal + interest, consumers will likely see significant increases in their monthly payments. While some may refinance into another loan, there is concern that those who do not refinance may charge-off at increased rates. As a result, the banking industry faces a potential double-whammy of larger volumes of HELOCs hitting their reset dates, along with greater loss rates on those larger volumes. With that in mind, we undertook a research study to better... [Read More]

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Customer Engagement Millennial Bank Loyalty … Not So Much

Aug202015

FICO has been looking at millennial banking habits for a number of years now, and banking loyalty is one area of particular interest to us and our clients. Our research and studies by others have consistently shown that millennials are much more likely to switch banks than other generational groups, and that their loyalty to banks is much lower than to other categories of products/services. Below is some data from a recent study that shows financial services at the bottom of the heap. Source: Adroit Digital, Millennials: The New Age of Brand Loyalty, 2014 When we spoke directly with millennials, we found similar results – bank loyalty is quite low. This short video of millennials discussing bank loyalty highlights some of those areas. Here are several interesting takeaways: One reason cited for not changing banks was the “hassle factor” of moving online banking. Many large banking institutions are viewed as... [Read More]

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