KeyBank, one of the largest financial services companies in the US, needed to improve collections performance and customer experience simultaneously.
Despite having more than 1,050 branches, the company thinks, acts and treats its customers with the personal touch of a community bank. KeyBank wanted to leverage these customer relationships to improve every touch point.
The challenge was getting a full view and understanding of each relationship in order to provide personalized treatment. This is particularly relevant for collections. Too aggressive, too impersonal, lacking respect for privacy and, most importantly, just plain ineffective are some of the classic complaints about the process.
The O.R. Solution
KeyBank selected a relationship-based strategy for collections and credit line management, powered by FICO® TRIAD® Customer Manager http://www.fico.com/en/products/fico-triad-customer-manager . This adaptive control solution, which is used to manage about 65% of the world’s credit cards, combines risk analytics based on customer data with automated decisioning. Users such as KeyBank can run multiple strategies in champion/challenger tests to continually improve decision performance. The solution is used in areas such as transaction authoriziations, card reissuing and early-stage treatment of delinquent accounts.
Account, customer, and household-level data feeds into FICO® TRIAD® Customer Manager from a variety of sources. Daily and monthly data is fed from the bank’s analytical datamart and data warehouse, and the system also incorporates regularly refreshed bureau data and scores.
“The advantage we’re seeing is the ability to bring all of these disparate data sources together within the TRIAD framework to make our decisions,” says Chip Clarke, KeyBank’s senior vice president for strategic analytics.
KeyBank’s primary use case of TRIAD Customer Manager is to prioritize delinquencies for action based on severity and probability of payment. Collections managers have multiple champion/challenger strategies competing at any given time. The bank uses models for each stage of delinquency and payment projections, along with credit bureau data and full customer-level information, all of which are factored into its decisions.
TRIAD Customer Manager has also helped the bank take better control of credit line management. In order to be sure high-deposit customers were being treated appropriately, the bank previously employed a laborious, manual process for identifying high-risk lines and determining whether to reduce or block them. Now, with TRIAD Customer Manager, the entire process is automated, with links to the servicing system to implement the revocations and reductions.
The bank’s customer-focused strategies have resulted in reduced collections costs and losses, a decrease in charge-offs, and stronger customer relationships.
“Every time we’ve implemented or upgraded on this project, we’ve delivered ROI just as quickly as or even faster than projected,” Clarke reports. “It’s allowed us the flexibility to implement challenger strategies at a very high tempo without eating into the technology budget.”
By automating credit line revocations and decreases, Clarke estimates a reduction in the bank’s open-to-buy ratio of around 5%—translating to millions of dollars that would otherwise have gone to charge-offs.
Knowing more about the customer and the extent of the relationship makes the collections experience simpler and more personalized for the customer. Collections staff can explain the customer’s delinquency situation more effectively and, where possible, apply offsets against DDA balances to help customers get current.
Overall, TRIAD Customer Manager has resulted in extensive cost savings for KeyBank, as well as more productive, long-term customer relationships. The FICO analytic solution has far exceeded expectations.