HSBC Boosts Monthly Card Spend 15% with FICO's AI Optimization

Today at FICO® World, the industry's leading analytic and AI event, FICO announced that HSBC, one of the world’s largest banking and financial services organisations, has used AI-powered mathematical optimization technology to grow its credit card portfolio. The project saw a 15% uplift in monthly card spend by customers selected for a credit line increase, compared to the previous strategy, as well as improvements in active card use and share of wallet, without increasing bad debt. HSBC has won a 2024 FICO Decisions Award for AI, Machine Learning and Optimization. 

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You can read more about this story in the full media release.

“Providing credit to our customers can be a real powerful tool to allow customers to achieve their dreams, and doing that in a sustainable way is a real passion of mine,” said Mike Roberts, head of unsecured retail risk, HSBC UK. 

Navigating the Competitive UK Banking Landscape

The retail banking sector in the UK is particularly competitive, and customers have fractured wallets, with three financial relationships on average. As part of its digital journey, HSBC has been focused on creating easy-to-use, tailored customer experiences, whilst delivering long-term revenue growth. The HSBC credit card portfolio was one of the areas targeted for sustainable and responsible growth by providing tailored credit line increase offers to customers.  

“It's important that we're not just providing credit to those customers that can't afford it, but to ones that can,” said Roberts. “By using FICO’s mathematical optimization, we were able to simulate responses to customer engagement, levels of spend, activations, loss rates, profitability and customer outcomes, whilst factoring in changes in economic and regulatory conditions. We were also able to better meet customer needs by targeting offers to customers that wanted and would use a credit line increase.”  

HSBC worked closely with FICO to design the decision influence process that captured their credit line increase business. Eight action-effect models were created to forecast the impact of the existing credit line increase strategy. These models were configured within FICO® Platform, together with HSBC's own profit calculations, and a suite of around 40 scenarios were developed to find the best solution.  

COVID Pivot: HSBC's Credit Card Limit Optimization

When COVID 19 hit in 2020, HSBC rapidly redeveloped the strategies to deal with the new economic climate. Despite reduced demand for credit during lockdown, the optimised strategy proved to be more effective than its previous strategy at generating card use.  

In July 2023, the UK passed Consumer Duty regulations, aimed at ensuring banks delivered products and services that are tailored to individual’s needs, deliver fair value, and do not put consumers at risk of unaffordable debt. By using FICO® Decision Optimizer’s precise mathematical techniques, HSBC is well equipped for determining the best outcomes and assisting its customers to deal with this regulatory change.  

“The ability to test vast decision strategy possibilities, inter-relationships and subsequent permutations in volumes and scenarios is way beyond the capacity of the human brain to calculate,” said Roberts. “At the same time, we are executing explainable decision strategies that provide the visibility and certainty to know that we are doing the right thing for customers.”  

“To get an advantage in one of the world’s most competitive credit markets is an outstanding achievement,” said Paul Robinson, VP credit management at Canadian Tire Bank and one of the FICO Decisions Awards judges. “The judges were impressed by HSBC’s savvy use of optimization and its ability to balance numerous objectives and constraints to find more successful options for its customers.”

To see the full list of this year’s FICO® Decision Awards winners, check out: https://www.fico.com/blogs/2024-fico-decisions-awards-winners 

How FICO Can Help Improve Your Credit Strategy Optimization

• Watch this video on why decision optimization is becoming a core technology in financial services
• Learn more about putting Credit Limit Increase Optimization into action
• Read about Turkey's Akbank and how it grow credit card approvals by 45 percent and limits by 60 percent.
• Read about Home Credit and its successful loan pricing optimization project