Why utilities and telcos will benefit from CCR
CCR is creating a paradigm shift in risk analysis. The result is that all lenders, including telcos and utilities, are beginning to reap the benefits of a positive reporting environment.
Telcos and utilities companies are in a unique position to take advantage of more insights because often these products are the first purchased by those who are newest to credit.
More information on these customers can only improve opportunities.
With insights now highlighting positive credit behaviour, CCR will ‘thicken’ a thin credit file. This reduces the ‘new to bureau’ percent and those considered high risk. With now more customers to lend to, you can increase your serviceable market and grow your market share.
Improve efficiency by better segmenting your market
Positive data helps you better predict which customers will have difficulty paying, improving your view of who is the most risky. This will direct you to work more efficiently by excluding them from your sales efforts, freeing you up to focus on potentially more responsive customers.
CCR opens up a world of four new data sets to telcos and utilities companies. A customer investigation would now help you identify:
- Date account opened—Understand the applicant’s experience of credit by reviewing the number of open accounts and the age of each account.
- Type of credit—See the mix of credit in the applicant’s ‘wallet’ to better understand their risk appetite and ability to get mainstream credit.
- Date account closed—Recognise which of the applicant’s accounts were responsibly managed but no longer open.
- Available credit limit—Understand the applicant’s overall exposure on cards and other products.
Say you’re focusing a sales program on your premium product package. With better insights up-front about your customers, you are better prepared to exclude people who cannot service another loan from a platinum offering. This helps you make the right lending decisions and set up customer accounts they can reasonably service that meet your responsible lending obligations.
Expected trends in the market
Whereas in Australia telcos and utilities cannot share monthly repayment information, New Zealand allows ‘full participation’.
Since full participation was permitted four years ago in New Zealand, we are now seeing measurable value for those using all the data. A recent proof-of-concept showed that incorporating full CCR data into accept and decline decisions, including monthly repayment information, resulted in an 8 percent increase in approvals and a 15 percent decrease in losses.
Submitting monthly positive repayment information also helps reduce the ‘new to bureau’ percent further and opens up more credit to underserviced markets.
The clear benefits across the Tasman have prompted lobbying for full participation in Australia.