Why you can no longer afford to rely on internal data alone when making customer management decisions
As the industry makes way for Comprehensive Credit Reporting (CCR), Credit Risk Managers are looking for ways to make the most of the predictive power gained from the bigger data sets on offer.
Turning to markets like the US and UK, where comprehensive reporting is well established, most lenders have applied bureau variables and the resulting scores right across the credit lifecycle to improve everyday interactions with their customers.
Decisions consider the entire customer relationship, which benefits customer retention, upsell and optimisation strategies.
Utilising bureau data helps lenders mitigate losses, increase productivity and improve the customer experience post-acquisition.
Minimise risk and predict customer behaviour
Whilst negative bureau data can help to reveal customer behaviour with other lenders, negative data alone doesn't always provide a thorough picture of an individual's creditworthiness. With the inclusion of account and repayment history information, CCR data provides earlier warnings that a customer is at risk.
CCR helps credit providers get ahead of the curve. You can be notified early when a customer is late with their payments with other lenders. It's then much easier to be proactive and take action to prevent up-to-date accounts from moving into collections.
Use new insights to make better decisions
UK and US credit providers have been able to create large-scale automation efficiencies to improve customer satisfaction and improve bad debt control. This is due to the use of behavioural scores, built off bureau data, and combining those with internal lender data.
Marketing and sales teams are also reaping big benefits. With a firmer grasp on the needs and riskiness of a prospect, it's easier to decide which customers to include or exclude in up-sell and cross-sell offers.
Similarly, collections departments can cut costs by reducing the time it takes to collect. This is with a better approach to segmenting customers and assigning the right treatments.
Utilise bureau data to improve the customer experience
More players in the market mean that customers now expect more from their lenders. If their interactions are negative, they will switch over to a competitor.
By utilising bureau data, lenders can discover more about the repayment history and types of credit held by their customers with other lenders. This is a gold mine of inights on a customer's overall credit risk.
A lender can use these insights to reduce decision times on requests for limit changes, and improve decisions on which customers are offered product extensions. They will also better know when to use a light touch in collections to prevent negative interactions with valuable customers.
The competitve edge with CCR is clear - with international markets clearly paving the way for best practice right across the credit lifecycle, Australian lenders can't afford to be idle. Innovative credit managers can be expected to secure market share with better decisions and more compelling offers.