Savvy deposit managers realize that account opening is an excellent opportunity to assess credit risk in order to refine acquisition strategies. We see clients increasingly leverage FICO® credit scores within these strategies, from setting pricing and shadow limits to up-selling credit products tied to deposits. Here’s an inside look at what they’re doing.
For customers with low or risky scores, banks may choose to refrain from cross-selling credit instruments. Or they may have a second review of applicants with marginal risk. Prepaid-cards could be offered as a cross-sell opportunity for riskier consumers with whom you may still wish to develop a deeper relationship, rather than simply offering a checking account.
Risky customers may need to be treated with more cautious strategies, such as keeping holds on deposits, pricing products appropriately for risk, and setting lower limits for ATM cards, debit cards, or overdraft shadow limits (if offered at all).
By contrast, high-scoring consumers may be offered better pricing or less cautious fee strategies, and may be put into special rewards programs, which can be used to deepen the relationship with the customer.
As the use of scores to book DDA gains ground, clients who choose the FICO® 8 Score will see added gains. That’s because it’s more predictive, especially for consumers new to credit and those with prior credit blemishes.
Of course, credit scores not only help build customer relationships from the start. They are also highly effective later in the customer lifecycle, and can be used along with deposit behavior scores in account management strategies—something I’ll cover in greater detail in an upcoming post.
