42 percent of consumers in Australia and 40 percent of consumers in New Zealand indicated they would like to apply for their next automotive loan online These were the surprising results of our first global survey on consumers’ automotive finance experience. The study found that there was a growing inclination for vehicle shoppers in the antipodes to apply for auto loans online. Australia and New Zealand had the second and third highest figures among the nine countries surveyed. Only the UK had more respondents who indicated a preference for online at 48 percent. These results indicate a significant shift in channel preference for loans with the majority of consumers in Australia (45 percent) and New Zealand (62 percent) having applied for their most recent auto loans at dealerships. “Unlike the US, where seven in ten respondents would rather apply for their next loan at a dealership or through a visit to the bank or... [Read More]
We recently held a very engaging and well-attended seminar in Manila on customer management and profitability. Of course, the topic doesn’t only strike a chord with our Philippine clients; it’s a growing priority for banks worldwide. Finding new customers is very costly, up to 5 times more expensive than broadening relationships with existing customers. Needless to say, it pays to know the needs of your customers and keep them satisfied, in order to grow those relationships and increase retention.
Across emerging markets in Asia, we’re seeing banks looking to invest in the right customer management solutions—solutions that enable the best mix of both account and customer data, and that leverage predictive analytics, to improve customer decisions in areas such as credit line management, collections and marketing.
At the seminar, we discussed the value of supplementing account data with enterprise customer data. For example, we see many regional banks using multiple collections systems: one for delinquent credit card customers, another for retail banking...
While high growth rates are fantastic, it’s very costly to originate new customers when compared with selling to your existing customer base. In fact, it can be more than five times more expensive to originate new customers. That’s one reason why improving customer profitability is so critical for a bank.
We'll explore this very topic in our upcoming FICO Seminar: Customer Profitability, taking place on July 17 in Manila at the Mandarin Oriental. Banks in high-growth areas are keen to learn how to maximise revenues and manage losses, whilst improving customer retention and satisfaction through multi-product ‘”stickiness.” At the seminar, we'll ponder such questions as:
Are your strategies and processes automated and refined to make you competitive and profitable in the face of more stringent regulations or an economic downturn?
Would you profit by taking faster action to control risk using intra-cycle risk assessments that leverage more granular transaction data?
Have you right-sized your credit lines with scalpel-like precision, or...
No matter where they're located, collections managers generally face the same challenges. In recent online polls taken during a series of FICO webinars in North America, the biggest priorities for collections heads were:
Nearly two-thirds of respondents were focused on driving innovation in early-stage collections or across the entire lifecycle.
More than 50 percent of respondents felt that technology was the area they needed to improve on the most.
The next most important area was process – getting the right strategy.
Many felt that collectors don’t have the right level of customer insight to help enhance staff, dialer and strategy performance.
These same issues arose during a recent webinar we held in Asia. The webinar focused on how collections heads could manage these issues and improve collections results in a relatively short timeframe. We discussed:
Predictive analytics for collections – i.e., collection scores. Collection scores can be configured to meet the objectives of the business. Typically they are built to predict which...
Many FICO clients are seeing benefits from customer-level decisioning. But some of the impacts are a bit tricky to quantify. One of these is the so-called “halo effect.”
It’s intuitive that customers who have a good experience with one type of account are likely to be more receptive to offers to extend the relationship into other types of accounts. “My bank is doing a good job with A, so they'll probably do a good job with B.” When this broader relationship is established and nurtured, customers tend to behave more profitably across all their accounts than customers with only a single account.
The halo effect also works in reverse. Customers angry at being charged fees on their debit accounts, for example, may transfer a negative view of the bank's performance to other existing or potential future account relationships. Even if a customer closes just one account and looks for an alternative provider, the opportunity is now there for that competitor to develop a halo effect of its own. They might do such a good job that the customer begins to...
My fellow blogger Rita Chakravarti recently noted that customer centricity has become a central theme in her conversations with banking professionals. I’ll add that most financial institutions are tackling this in stages. We’re seeing them move toward full customer-level management capabilities gradually, and reap profit gains at each stage for each product line.
Here’s an example. I’ve been working with an Australian bank committed to putting the customer “at the center of every decision.” The bank began by implementing a policy that required all account-level strategies to be evaluated with customer-level data and scores, even if only as a knockout rule.
The bank then advanced to customer-level scoring. Traditionally it had calculated account-level risk scores in isolation then rolled them into a cumulative customer-level score. But this resulted in sub-optimal identification of risk, as influencing product relationships (cards, deposit accounts, insurance, investment/pension holdings) were not being taken into account. Also, multiple good/bad...
These days, collection managers face many tough questions. How can we do more with the same resources? How can we make sure to work the right delinquent customers? Can we improve the timing of collection actions? How can we improve kept promise rates and offer better customer service? And, how can we make improvements in weeks rather than months or years?
Collection managers are looking for speed to market with their initiatives, and a quick ROI so that everyone, from senior management to collectors, can see results. In today’s environment, budget for investing in new collections technology is scarce, the availability of in-house IT resource is often more scarce, and projects are prioritized strictly on ROI impact. Yet it's still possible to make a significant impact in collections performance and improve customer service without huge investment.
This is the focus of my upcoming FICO webinar, Gaining Speed to Market with Best Practice Collections, to be held on May 10th. Together with my colleague Steven Matthews, who is a FICO global business consultant,...
Even lenders with the best analytics and decision management platforms often struggle to communicate advice and offers to customers. Wouldn't it be great if they could do so via a low-cost channel that their customers actually enjoy using, and thus is likely to yield more and higher-quality responses?
Together with Telrock, our partner and experts in mobile digital communications, we’ve been talking to Australian banks about how they can improve customer service and dialogue, while decreasing costs. According to research by Google, Australians have gone from “lagging to leading” in the smartphone revolution, with the second-highest smartphone penetration in the world, at 37%. And if your customer base is already actively using the technology, it makes sense to leverage it as a communication channel of choice.
Some Australian banks are using SMS messaging to alert customers about potential fraud on their credit cards, or to remind them about payments due once they are delinquent. But these communications tend to be one-way only. As such,...
Emerging markets in Asia are seeing tremendous growth in credit applications at the moment, particularly in countries like the Philippines, Thailand and Indonesia. The Philippines, for instance, has witnessed credit card growth by volume between 10 – 15%, and Asia Pacific is expected to move from the third to second largest of the seven regions by 2016 in terms of card payment volume.
Many of our APAC banking clients are looking to automate their originations decisions for the first time, and enhance those decisions with application scores, and bureau data and scores where available. For example, when a bank in the Philippines decided to venture into the consumer banking market by offering auto loans, credit cards, mortgages and personal loans, they knew they would face stiff local competition. Working with FICO, they're determined to build competitive edge through the right analytics, decision management technology and risk strategies.
With originations accounting for as much as 40% of total bank costs and up to 80% of the risk, banks in these growth...
As you heard from fellow blogger Dan McConaghy, FICO recently partnered with IDC to host what is probably the biggest gathering of banking CROs in Asia Pacific. A hot topic at the FICO APAC CRO Forum was customer profitability – how to expand existing customer relationships whilst offering superlative customer service and minimising attrition.
The big 4 banks in Australia have been increasingly focused on maximising customer profitability for quite some time, driven by both regulation and competition in a saturated market. With debit cards accounting for more than 40 percent of card transactions and regulators focused on responsible lending, (an opt-in regulation for line increases is coming in July 2012), it’s clear that banks down-under can’t rely on new account acquisitions and line increases to maintain profitability.
Most of these banks use account and customer data and analytics in decision making throughout the customer lifecycle. Many also are using decision optimisation to more accurately assign credit line increases to those customers most likely...
