Fair Isaac Corporation
Fair Isaac Corporation
15/08/2024 | Press release | Distributed by Public on 15/08/2024 13:50
Using More Customer Management Tools Can Generate Millions in Incremental Profit
A recent study conducted by the FICO® Advisors team revealed that some financial institutions that have adopted FICO® customer management tools1 as part of their technology stack are achieving incremental profits of tens of millions of dollars when utilizing FICO® solutions to the fullest extent.
For active2 users, every incremental utilization of FICO customer management tools delivers higher levels of account profitability - often into the millions of dollars - without incurring increased levels of delinquencies and defaults. In addition to the financial benefits, active users are able to respond to ever-changing business and regulatory priorities more quickly. These firms are also progressing more favorably towards the latest available technology upgrades and capabilities. Conversely, companies that are passive users have continued to operate unchanged over many years with only the most basic functions enabled.
The underutilized features of your existing client management system are the ultimate low-hanging fruit. Finding ways to fully leverage existing tools in a more effective and comprehensive manner is a guaranteed way to add value to your business without a need for a major investment.
Here are several ways you can unleash the maximum value from your existing customer management technology:
1. Decision Areas: Broaden Use Case Coverage
Customer Management Tools are typically initially implemented to manage risk for a single or multiple products, and are most frequently used to assign credit limits or determine whether to approve card transactions. However, this client management technology can also be leveraged profitably in other customer decision areas, such as determining the best collection strategy or targeted marketing offers. In fact, active2 users generate more money in interest ($23 versus $19 on average) and go delinquent for less ($2,130 versus $2,939 on average).
2. Data Enrichment: Gain a Competitive Edge with Unique Customer Data
Every organization's customers are different from those of its competitors. Your internal customer database contains insights that competitors cannot know or utilize. With this proprietary information, financial institutions can further elevate their insights by developing unique sets of data attributes and unique calculations to capture more of their customers' behavioral patterns and drive better customer interactions. Our study found that active users see more customers utilizing their products (55% versus 52% on average).
3. Predictive Analytics: Decision Modeling and Optimization
Customer Management Tools are most commonly utilized on a scheduled monthly basis and tied to billing cycles. However, using advanced statistical techniques and/or predictive models/scores to improve how strategies are created can provide impactful ways of increasing the value of your client management technology. For instance, a bank can create event-triggered marketing offers in response to a customer's most recent activity, thus significantly improving customer response, product penetration, and customer loyalty. Client management tools can also help adjust collections strategies based on customer actions as well as adverse conditions (such as those reported in consumer credit reports).
4. Continuous Strategy Evolution: Adapt to Changing Economic Conditions
The strategies used in FICO® Customer Management today must also be adapted to the changing economic conditions and corporate strategies. Rather than making infrequent changes to your decision strategies, establish a champion-challenger framework that promotes constant hypothesizing, testing, and implementing of new strategies with a focus on continuous performance improvement. This is crucial for growing client relationships and building sustainable customer loyalty in today's market. The FICO Advisors study found that this approach can be translated into $19.3 million on average of additional annual revenue in a credit card environment with a portfolio size of 500k accounts.
Study results show the potential gain from more active use of FICO customer management toolsReach out to your designated FICO Advisor or Sales Executive today if you are interested in hearing more from us about customer relationship management or similar topics.
1 FICO customer management tools include FICO® TRIAD® Customer Manager, FICO® TRIAD® Customer Manager at TSYS, FICO® TRIAD® Customer Manager at FiServ International, FICO® TRIAD® Customer Manager at FIS, as well as FICO® Strategy Director, FICO® Decision Modeler on FICO® Platform. Adaptive Control System (ACS) on FiServ US is wholly owned by FiServ and is powered by FICO analytics with support from FICO® Advisors. The performance results for all of these permutations and combinations are included in this research.
2 Any client using eight or more available features of FICO customer management tools, add-on functionality, and other related FICO tools and services is considered active.