The business challenge
In the highly competitive retail banking environment, banks are spending large marketing budgets to win new customers.
However, rising acquisition costs also mean that customer retention is key, with banks looking to prevent attrition and maximise the value of existing customers.
The growth in the availability of credit over recent years has led to increasing numbers of banking customers becoming indebted across a number of different credit products. This has significantly impacted bottom line profitability as a result of increased provisioning, bad debt write-off and the increasing costs of collections activity.
Banks have recognised that managing credit loss is a key driver of profitability. In the multi-product, and therefore multi-debt relationship, banks are facing up to the challenges of adopting a customer-centric approach to the management of arrears.
The answer
The proven system automates and streamlines the collections process to collect more debt from more customers.
Experian’s proposition for debt management in retail banking can be deployed across every product a customer holds, including credit cards, mortgages, asset backed loans, unsecured lending and revolving credit activities, to drive dynamic, tailored collections strategies for each delinquent customer.
Customers are finely segmented to create an accurate profile and, using behavioural scoring, each customer is assigned a risk score, which is used to drive the most appropriate collections strategy. With customers holding multiple products, banks can deploy customer-centric collections activities, which closely match both the value of the customer and the overall credit risk they represent.
Using the profile, collections actions can be effectively prioritised, such as leaving habitual late payers to self-cure and focusing resources on high risk, high value customers.
The system automates collections activities on lower risk, lower value accounts to minimise manual intervention and enable staff to concentrate on higher value, higher risk collections. It also manages the allocation of debt to collections agents and accurately monitors performance to minimise commission payments.
Operators can benefit from:
- Minimising collections costs and time to collect
- Increasing cash flow
- Improving recovery rates and reduce bad debt write-offs
- Improving staff productivity and focus collections resources
- Protecting future revenue streams and reduce churn
Testimonial
“Experian were able to offer a dedicated collections solution which could be deployed rapidly, and as importantly, deliver the business consulting skills and best practice experiences to support their solid implementation capabilities. You just have to look at the results we have achieved, such as productivity up by 70% and provisioning levels reduced by more than 20%, to see the value that this project has given to ABN AMRO.”
ABN AMRO, European Retail Bank