Australia’s second-largest bank takes Customer Growth & Retention award
SINGAPORE—July 9, 2014—FICO (NYSE:FICO), a leading predictive analytics and decision management software company, today announced that Westpac, Australia’s second-largest bank, has won the 2014 FICO Decision Management Award in the Customer Growth & Retention category. Westpac has deployed FICO transaction scoring across its 3 million credit card accounts, changing the measurement of customer risk and attrition likelihood from a monthly to a daily activity.
Westpac is using predictive models from FICO that analyze daily card transaction data to improve customer offers, authorize more transactions and prioritize collections efforts. The solution is on track to deliver approximately $6 million per year in increased revenue and reduced bad debt expense.
“In a fiercely competitive banking market such as Australia, the main financial players are fighting for share of wallet, with customer service as the principal battleground,” said Paul Deall, senior manager of unsecured risk at Westpac. “Improving the speed with which we can identify and act on changes in customer behavior has given us an edge. Customer communication is also a major contributor to account retention, so improving our reaction time has helped us hold onto customers.”
Westpac was looking to drive improvements in customer service for its credit card base. At most lenders, decisions about which actions to take to retain a customer, or which additional products to offer, are made once a month. Lenders will score the customer’s behavior over the previous month to inform decisions and actions. Westpac thought that this approach was leaving money on the table.
“This monthly cadence allowed a four-week window in which we could potentially lose business,” said Deall. “A dialogue with the customer might start six weeks after a change in spending patterns was observed — and that was often too late.”
After Deall attended a transaction scoring presentation at a FICO World conference, Westpac worked with FICO to develop and implement a daily transaction score across its credit card accounts. FICO predictive models and FICO® TRIAD® Customer Manager enabled Westpac to use information derived from oceans of credit card transaction data in order to comprehensively manage its card portfolio risk, satisfy regulatory requirements, improve customer retention and drive customer advocacy.
Since moving risk and attrition scoring from a monthly activity to a daily one, Westpac can respond to changes in customer behavior more quickly. “For example, through authorization decisioning, we are now making better decisions on 1.3 million transactions, per month which enables us to minimise the chances that our good customers will have a transaction declined,” said Deall. “This poor experience often leads to a drop in confidence in the product and an increase in silent attrition, where customers just stop using the card.”
Westpac is also incorporating daily transaction scoring to make its collection scores more dynamic, allowing better prioritization of accounts and better assignment of actions on overdue customers. To do this, Westpac uses FICO® Customer Communication Services to execute collections communications via SMS or automated calls to customers, based on decisions coming from the FICO TRIAD system. Closing the loop from early detection of risk to rules-based communications has driven further efficiencies and cost savings at Westpac.
The project took around 12 months to implement, from June 2012 to June 2013. “The FICO solution is future-proofed and scalable,” Deall said. “It has been built on a hosted platform and therefore can be improved over time as new features become available.”
“Westpac has a reputation as a trailblazer, and they went against the way the banking industry usually works by moving away from the monthly cadence to real-time risk assessment,” said David Bannister, editor of Banking Technology, who was one of the panel of independent judges. “With this project, they really kicked down a few doors.”
About the FICO Decision Management Awards
The FICO Decision Management Awards honor companies that have achieved outstanding business results using FICO’s predictive analytics and decision management solutions. Winners will be featured in presentations at FICO World 2014 in San Diego, November 11-14.
Winners were selected by a panel of esteemed industry analysts and journalists: Tom Davenport, co-author of Competing on Analytics; Brian McDonough, research manager in IDC's Business Analytics Solutions research service; John Rymer, vice president and principal analyst serving Application Development & Delivery for Forrester; David Bannister, editor of Banking Technology.
FICO (NYSE: FICO) is a leading analytics software company, helping businesses in 90+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption. These include the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com.
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