Vision 2014: Migrating-to-a-holistic-customer-view

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Migrating to a holistic customer view A panel discussion

Paul Akey ScotiaBank

Mike Freeman Compass Bank

Andrew Beddoes Experian

Philippe St-Aubin Group Desjardins

Mike Pfeifer Experian

Panelists:

#vision2014

2 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.

To share with you experiences from the industry from clients migrating from a traditional account level to a customer centric approach to portfolio management

To share opportunities and challenges

To understand the drivers and motivation for change

To provide insight into business benefits

Session objectives


Holistic customer management

Definition: The ability to consider the

complete relationship between

the customer / member and

the financial institution in the

execution of strategic decisions

across the Customer Life Cycle


Check deposit (DDA) account (both salaries deposited)

Credit card

Line of credit

Mortgage

Mr. & Mrs. Brown

Check deposit (DDA) account

RSP savings

Car loan

Mrs. Brown

Check deposit (DDA) account

Secondary DDA account

RSP savings

Credit card

Mr. Brown

Definition of a customer

1

2 3

4

A vital component of customer level decisioning is the methodology used to define a customer


Weak

Strong

Pre

dic

tive

po

we

r

The importance of cash flow information

Power of data from different sources

Cash flow data impact varies by product type

Cash flow data increases the power of the scorecards

Use of all sources of traditional account data and cash flow data provides best results Loans

Primary

DDA

account

Customer

Level

(including

DDA)

Customer

Level

(including

DDA, savings

and credit

bureau)

Non-

primary

DDA

account

Credit

cards


Holistic customer management Essential components


Risk evaluation

Customer definition

Customer level risk grade

Strength of relationship

Adaptive control capabilities

Affordability / ability to pay

Net monthly income

Expected monthly expenditure

Known credit commitments

Disposable income

Product offering

Apportionment

Push vs. pull strategies

Offer validity period

Capital requirements

Operational deployment

User interface design consideration

Legal considerations

New business and customer management


Holistic customer management Essential components

Consumer Small Business

Full customer view


ACQUISITIONS

LOS 1

LOS 2

LOS 3

LOS 4

LOS 5

LOS 6

Lo

an

ori

gin

ati

on

sys

tem

Solution overview

CUSTOMER MANAGEMENT

Decision engine

B.P. 1

Bo

ok

ing

pla

tform

B.P. 2

B.P. 3

B.P. 4

B.P. 5

B.P. 6

DA

TA

A

GG

RE

GA

TIO

N L

AY

ER

When?

New credit request

Renewals

Limit increase

request

Decision engine

Application score

Initial decision:

approve / refuse /

refer

Limit / loan amount

Rate / terms

Product bundle

Mamc

Cross-sell order

When?

Monthly batch

Product billing

Significant

event

EXISTING CUSTOMER

LENDING PARAMETERS

Customer risk grade

Strength of relationship

Customer credit limit

Customer value indicator

Product credit limit

Maximum additional monthly commitment

Propensity scores


Fast track processes

Servicing implications – Best-in-class approach to ensuring good customer experience AND manage marketing outreach by aligning offers with availability of exposure while being done in a way that recognizes customer strength-of-relationship

Push/pull strategies – Global best-practice typically uses this process in a reactive way based on consumers applying for additional products instead of active cross-sell. Can be used to limit cross-sell to most appropriate products as well

Consumer sentiment – Consumer “net promoter” scores dramatically increase with fast-track processes

Fast track originations Enables ability to mitigate risk and improve customer experience!

New credit request

Existing borrower New customer / non-borrower

Full data capture and bureau

check

Full customer risk assessment

Accept

Reject

Refer

Loan amount requested < MAMC

Loan amount requested > MAMC

Bad risk grade

Reject/full

Good risk grade

Approve

Fast-track

Accept on

signature


Panel discussion



Q1: What are the business benefits

which draw your organization towards

the adoption of a customer-level

approach?



Q2: Customer level decisioning is not a new concept. It has been widely adopted at various stages of the Customer Life Cycle across the globe.

a) Why do you think that U.S. financial institutions have been relatively slower adopters?

b) Canadian financial institutions have adopted this concept far more rapidly than their U.S. counterparts. Why do you think this might be?



Q3: What were the principle business

challenges you faced as part of the

migration process?



Q4: Which area of the Customer Life Cycle

do you see as having the largest

potential business benefit from

migration to customer level?



Q5: a) In what ways have your customers / members

benefited post migration from account level to customer-level decisioning?

b) In what ways have you, the lender, benefited post migration from account level to customer- level decisioning?



Q6: What technological challenges did you

face and how were they overcome

during the migration process?


Open questions


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