Vision 2014: Leveraging Hosted Decisioning for Cross-sell Marketing and Segmentation Opportunities

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Leveraging hosted decisioning for cross-sell marketing and segmentation opportunities

Alpa Jain Experian

Allison Saffran Experian

#vision2014

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

After today, you will…

All by harnessing the power of Experian’s data and processes

Know that increasing relationships with the customer increases profitability

Know how to more successfully cross-sell customers

Be increasingly knowledgeable about tools that will help you more effectively cross-sell to customers

Know how to reduce overall costs


Agenda

Why cross-sell?

How we do it?

Segmenting consumers for growth

Simple as ordering off a menu


Why cross-sell?


$23,622

$26,755

$33,130 $30,757

$-

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

Bankcard Only Bankcard + 1 otherproduct

Bankcard + 2 otherproducts


Average bankcard total annual plastic spend


0.32%

0.20%

0.03% 0.03%

738 738 746 737

300

400

500

600

700

800

0.00%

0.05%

0.10%

0.15%

0.20%

0.25%

0.30%

0.35%




Bad Rate (90+ DPD)

Vantage V3

Average bankcard bad rate (90+ DPD)


0%

5%

10%

15%

20%

25%

300-499Deep Subprime

500-600Subprime

601-660Nonprime

661-780Prime

781-850Super Prime

24.6%

1.9%

0.1% 0.0% 0.0%

15.3%

6.1%

4.5%

0.6% 0.0% 0.0% 0.0%

Bankcard Only

Bankcard + 1 other product

Bankcard + 2 other products


Bankcard bad rate by risk band


$1,699

$2,473 $2,984

$3,529

$8,683

$9,724

$10,743 $10,078

27%

31% 30%

38%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

$-

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000




Balance Credit Limit Utilization

Average bankcard balance, credit limit and utilization


0%

20%

40%

60%

80%

100%

120%

300-499Deep Subprime

500-600Subprime

601-660Nonprime

661-780Prime

781-850Super Prime

100%

80%

64%

28%

6%

86% 91%

78%

43%

11%

Bankcard Only

Bankcard + 1 other product



Utilization by risk band


How we do it?


Poll Question #1

Where do you have an opportunity

to connect with your customers?

a) In branch (branch representative

at account opening/teller)

b) ATM

c) Online (account opening or account online login)

d) Call center

e) All above


Poll Question #2

Where do you actually connect

with your customers?

a) In branch (branch representative

at account opening/teller)

b) ATM

c) Online (account opening or account online login)

d) Call center

e) None of the above

f) All above


Every interaction with the consumer is an opportunity for cross-sell

Underwrite Cross-sell Prequalify


Present real-time tailored credit offers while your customers are engaged: Instant prescreen

Opportunity Current customer walks into a

branch to make a deposit

Action Teller uses name and address

from CRM to prescreen customer

Experian returns “Yes” response if

customer passes pre-defined

criteria

Inquiry type Soft

Result A pre-approved firm offer of credit

is made while the customer is in

the branch

“Congratulations!”

Since this is behind the scenes, the CSR only communicates a positive result


Qualified?

Yes

No

“You qualify for a

credit card, would

you like to apply?”

No action required

This is accomplished in real-time: Typical instant prescreen flow

A “firm offer of credit” is required

Real-time inquiry (permissible purpose is not required)

Fin

ancia

l

Institu

tion

Account opened

Decisioning as a ServiceSM

Soft inquiry for Approvals

Attributes Risk / fraud score(s)

Instant prescreen decisions

Treatment

Risk score

Debt to income

Approve

Decline

Employment status

Approve

Decline


Extend prequalified offers while your customers are engaged: Prequalification

Opportunity Customer visits your Website

Action Invite them to see their best-fit

credit options and obtain consent

to pull their credit profile

Experian returns best-fit credit

options

Inquiry type Soft

Result The customer is presented only

with relevant offers – credit and/or

non-credit

“See what you prequalify for!”

Removes the opportunity for the consumer to adverse select the wrong products


Instantly approve customers for credit while they are engaged: Instant credit

Opportunity Consumer is engaged and ready

to apply for a loan

Action Consumer fills out application and

lender initiates call to Experian

Experian returns credit

underwriting decision and

credit report

Inquiry type Hard

Result The consumer is instantly

approved for a loan

“Apply now”

Receive an instant credit decision using your own custom underwriting criteria


Segmenting consumers

for growth


Poll Question #3

For which products do you see the most

opportunity for growth this fiscal year?

a) Bankcard

b) Auto loan

c) Mortgage

d) Personal installment loan

e) Home equity line of credit

f) Home equity loan

g) Student loan


Poll Question #4

Are you currently using segmentation

tools to deliver the right offer to the

right consumer?

a) Yes

b) No


Differentiating consumers through data

Spend, payment, and revolving APR data enable a much better understanding of how a consumer uses credit

Monthly

balance

and payments

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11

Total Bankcard Balance

Total Bankcard Payments

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000




$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000




Consumer A Consumer C

Average monthly balance

VantageScore®

$3,462 $3,465

740 744

Consumer B

$3,435

736

What is the best product for the customer?

Total annual payments: $1,126 $42,429 $22,390

Average % of balance paid: 2.6% 100.0% 53.4%


Segmentation

Does the consumer

own a home?

Does the consumer

use revolving credit?

Is the consumer’s debt

spread across multiple

credit card products?

Is the consumer high risk?

Is the consumer likely to

consolidate their debt?

Is the consumer paying a high

rate on their revolving lines?

Is the consumer likely to open

a new tradeline in the next

2–4 months?

Does the consumer

have high annual

spend on credit cards?


Precise targeting

Identify consumers who have been revolving for many months for balance transfer offers

Target revolvers with consolidation / personal loans

Target transactors and “super transactors” with reward offers

Create campaign efficiency - suppress “card collectors” and “rate surfers”

Target revolvers who are homeowners with less than 43% DTI for home equity products to consolidate debt

Understanding behavior to satisfy consumer credit needs

… results should drive offer strategy improving

response, optimizing marketing expense and

enhancing the customer experience


Simple as ordering

off a menu


Propensity Models and Scores

VantageScore® 3.0

In the Market ModelsSM

Ability to Pay

Income InsightSM

Income Insight W-2SM

Trended Solutions

Trend ViewSM

EIRCSM

Risk Stability IndexSM

Experian TAPSSM (Total Annual Plastic Spend)

Analytics

Premier AttributesSM

Balance Transfer IndexSM

Extended ViewSM score

Asset InsightSM

Short Term AttributesSM

Payment Stress AttributesSM

Deleveraging AttributesSM

Property Valuation

Real strategies. Real opportunities. Real growth.


Payment Behavior:

MIN PAY – 2% Annual Card

Spend:

$7,500

6 month yield:

$ 74

Avg. Effective APR

16.99%

In the market?

Bankcard

BT Index (0-999)

875 BTs in last 12

months

2

Revolving trades:

4

Transacting trades:

0

Risk Index rating:

Unstable

Utilization in last 6 months:

+ 35%

Credit card bals last 6 months:

+ $8,000

Viewing the customer as a unique individual An opportunity for enhanced segmentation

Behavior

Risk Revenue

Response


Customer

profile

Female, age 40, dentist, married

with 2 kids and a dog

Credit

profile

VantageScore® 3.0 – 740 Bank ABC products – DDA and

mortgage

Products with other banks – two credit

cards, one retail card

Gross family income – $420,000

Total annual plastic spend – $103,000

Consumer behavior – transactor

Result (cross-sell

opportunity)

Rewards product with no preset

spending limit

Benefit to

customer

Rich rewards program, flexibility

to spend

Case study – meet Jenny, Bank ABC client



VantageScore® 3.0


Ability to Pay

Income InsightSM


Trended Solutions

Trend ViewSM

EIRCSM



Analytics




Asset InsightSM




Property Valuation



Customer profile

Male, age 32, lawyer, single

Credit

profile

VantageScore® 3.0 – 732 Bank ABC products – DDA and bankcard

Products with other banks – auto loan

(newly opened, 5.34%, $16,000,

60 months)

Gross income $90,000


Consumer behavior – revolver

Result (cross-sell

opportunity)

Direct Auto loan, 3.75%,

60 months

Benefit to

customer

Lower rate translates to 4% savings

per month totaling $695 over the life

of the loan

Case study – meet Mark, Bank ABC client



VantageScore® 3.0


Ability to Pay

Income InsightSM


Trended Solutions

Trend ViewSM

EIRCSM



Analytics




Asset InsightSM




Property Valuation



Case study – meet Peter, Bank ABC client

Customer profile

Male, age 45, business owner,

married with two kids

Credit

profile

VantageScore® 3.0 – 744 Bank ABC products – DDA

Products with other banks – five credit

cards, three retail cards, mortgage

Customer income – $125,000


Consumer behavior – revolver

DTI – 30%

Result (cross-sell

opportunity)

HELOC to consolidate debt from

credit cards

Benefit to

customer

Consolidate balances to one loan

product, lower APR, interest is tax

deductible



VantageScore® 3.0


Ability to Pay

Income InsightSM


Trended Solutions

Trend ViewSM

EIRCSM



Analytics




Asset InsightSM




Property Valuation



Increasing relationships with the customer increases profitability

Endless opportunities to engage with your customer

Understand how to more successfully cross-sell customers

Increased knowledge about tools that will help you more effectively cross-sell to customers

Opportunity to reduce overall costs

It is as simple as ordering off a menu

Next step: Call your Account Executive

Last course: Desert and coffee

Bon Appétit


For additional information, please contact:

[email protected]

[email protected]

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