SCL Conference 2015: Risk Optimisation Not Risk Minimisation (AI Corporation)
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Transcript of SCL Conference 2015: Risk Optimisation Not Risk Minimisation (AI Corporation)
Payment intelligence to enrich, protect & grow your business
Passionate About Payments
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Passionate About Payments
CONFIDENTIAL2
Risk OptimisationNot Risk Minimisation
INTRODUCTIONPetrol to payments
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Risk OptimisationThe holy grail - how do we find the perfect customers
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Risk OptimisationMeasuring KPI’s that help optimise the KVIs
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Volume growth Unit margin growth
Grow customers
Grow existing customers
Reduce attrition
Extend Sales Channels
Segment to target high margin customers
Reduce fraud, bad debt
Increase self service
Operational improvement
Additional high margin products/services
Value – best in class
• # accounts• Customer life• Cust lifetime value
• Revenue/account• Share of wallet
• # dormant accts• # lost accounts• Account attrition volume
• Number of partners
• Revenue & Cost per Tx• Margin/account
• Fraud• Bad debt
• # customer support interactions
• Cust satisfaction
• Hr/core activity• # process steps
• Revenue due to add’l prod/svc
Key valu
e ind
icators
Key p
erform
ance
ind
icators
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Customer Value/Risk Segmentation
Low Value
Low Risk
High Value
Low Risk
Low Value
High Risk
High Value
High Risk
Value Risk Index
3/30/2015
Risk OptimisationSegmenting out high value/low risk
Big Companies
Risk Minimise
Have Strong Balance Sheets
Small Companies
Take greater risk
Don’t have the balance Sheet
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Risk OptimisationNot that easy
what it really looks like
what people think it looks like
SuccessThe Three Disciplines –companies should seek to excel in one
and be competent or better in the others
More complexityExplosion of innovation
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Managing Greater Customer ChoiceTechnology and adoption rates
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More customer choice = more dataCreating more and more decisions
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More customer choice = more decisionsCreating more and more decisions
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Fraud ExamplesGenuine ExamplesCrisp Decision
Boundary
ExpansionExpansion
Cgenuine Cfraud
Plausibility Range
Business Reality Under invested back offices
30/03/2015 12COMPANY CONFIDENTIAL
Banks looking for a pay-off from investments made in digital processes should focus on back office automation projects and steer clear of multi-channel integration, according to research from McKinsey.
FINEXTRA, 9th December 2014
30/03/2015 13COMPANY CONFIDENTIAL
more risk more effort
Fraud
Rising costs
Reduced resource
Payment types
Sales channels physicalonlinemobile
Services Integrated Platforms
Demand for value added &
personalised services
more complexity
Competitors
Your business is under increasing pressure from external and internal drivers
Rapidly Evolving LandscapeWe understand your challenges
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End-to-end industry-compliant
payment service platform
Self service
Rules engine
Real time information
Operations
Sales and marketing
Credit and finance
Customer service
Customer friendly self service solutions
Self learning back office solutions
Payment data is rich with information, what, where and what time it was bought, the price ofthe goods, (some channels, who has bought, delivery address, e-mail, telephone number)
Solution – Back Office AutomationSelf services systems linked with self learning systems
Utilising payment “purchasing pattern” information;
to build customer retention, to prompt up-selling by using buying
recommendations techniques at the point of sale
to optimise price/margins and supply chain
to help better manage the credit and settlement processes
Using payment data to automate
decisions making
Data Exports
SystemAlerts
BusinessAlerts
EnterpriseLinks
Pattern Detection
Rule Optimisation
Rules Engine
Data Imports
Established Payment Data
Sources
New Emerging Data Sources
Real Time Decisions Using AutomationWe do it for fraud – why not other areas
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CustomerValue/Risk Segmentation
Low Value
Low Risk
High Value
Low Risk
Low Value
High Risk
High Value
High Risk
“AD HOC”
ProspectTargeting Criteria
New Customer
Monitoring
Existing Customer
Monitoring
3/30/2015
CustomerValue/Risk Segmentation
Low Value
Low Risk
High Value
Low Risk
Low Value
High Risk
High Value
High Risk
REFINED
Customer ManagementReal Time Portfolio Management
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Volume growth Unit margin growth
Grow customers
Grow existing customers
Reduce attrition
Extend Sales Channels
Segment to target high margin customers
Reduce fraud, bad debt
Increase self service
Operational improvement
Additional high margin products/services
Value – best in class
• # accounts• Customer life• Cust lifetime value
• Revenue/account• Share of wallet
• # dormant accts• # lost accounts• Account attrition volume
• Number of partners
• Revenue & Cost per Tx• Margin/account
• Fraud• Bad debt
• # customer support interactions• Cust satisfaction
• Hr/core activity• # process steps
• Revenue due to add’l prod/svc
Ke
y value
in
dicato
rsK
ey p
erfo
rman
ce
ind
icators
Fraud risk
• Traditional transaction rules looking for suspicious activity or changes in behaviour
Credit risk
• Identifying customers with a change of circumstances who may require credit review
Marketing
• Identifying customers who met spending milestones or where transaction activity may be applicable for product upgrade
Collections & recoveries
• Identifying customers who spend beyond means or continue to accumulate debt.
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Holistic Business ManagementMeasuring KPI’s that help optimise the KVIs
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THANK YOU FOR YOUR TIME
Questions?