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Taking Your Collections Performance to the Top

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Information about Taking Your Collections Performance to the Top
Technology

Published on March 14, 2014

Author: FICO

Source: slideshare.net

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Intelligent communications and customer self-service help you scale the shifting economic, regulatory and social environment. Learn more at http://www.fico.com
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Taking Your Collections Performance to the Top Intelligent communications and customer self-serve help you scale the shifting economic, regulatory and social environment

©2014 Fair Isaac Corporation. All rights reserved. 2 Today you have more challenges, and more ways to succeed Take steps to raise collections performance In today’s dynamic collections environment, traditional approaches are less and less effective. New techniques—like self-serve ways for customers to resolve delinquencies from their mobile phone—produce higher ROI for collections time, effort and expense. Browse the five key steps—and learn how one bank used intelligent omnichannel communications and customer self-serve to collect 51% more debt than its current call center, at an even lower cost than an offshore alternative. ©2014 Fair Isaac Corporation. All rights reserved. 2 u

©2014 Fair Isaac Corporation. All rights reserved. 3 Five ways to increase your collections effectiveness Keep getting better, faster Take the guesswork out of collecting Resolve delinquencies in a flexible manner Connect before they’re late Contact customers in the way likely to succeed ©2014 Fair Isaac Corporation. All rights reserved. 3 u u u u u

©2014 Fair Isaac Corporation. All rights reserved. 4 Use automated intelligent omnichannel communications to determine the best contact strategy for each customer „„ Reduce friction in valuable relationships by giving customers quick, easy ways to take care of a missed payment. „„ Targeted mobile contacts (not mass blasts) work. One creditor collections organization using self-service voice and SMS achieved: 80% Right-party contact 79% Self-serve pay or promise 69% Conversion rate from promise to pay Contact customers in the way likely to succeed “…improving personalization is about more than just making better use of customer data. It means developing technology to give customers greater control over when and how they interact with their bank.” Ernst & Young 2012 Global Banking Survey ©2014 Fair Isaac Corporation. All rights reserved. 4 Back to main menu

©2014 Fair Isaac Corporation. All rights reserved. 5 Automated contacts are preferred by most customers One collection organization reports: 61% Of surveyed customers said they preferred an automated contact (voice, email or SMS) over being called by a collections agent 70% Average customer satisfaction with the experience 84% Average customer satisfaction, high-risk customers Contact customers in the way likely to succeed Also, experiments FICO is conducting with a large European bank indicate some consumers may be more responsive to evening contacts for simple, self-serve transactions. ©2014 Fair Isaac Corporation. All rights reserved. 5 Back to main menu

©2014 Fair Isaac Corporation. All rights reserved. 6 Contact customers in the way likely to succeed Intelligent automated communication is more cost-effective than any other method One company compared its current call center operations with two alternatives: an offshore call center and a FICO-automated solution. Both used the same risk-based methodologies to target collections actions. Results 51% more collected by FICO solution compared to current operations at a lower cost than the offshore alternative which collected only 14% more than current operations. ©2014 Fair Isaac Corporation. All rights reserved. 6 Back to main menu

©2014 Fair Isaac Corporation. All rights reserved. 7 Keep contact information current and the lines of communication open while time is on your side 10% > 25% lift in found rate for “lost”customers A global bank is using automated telephone number capture and validation on all customer interactions. It also reaches out with proactive communications. For instance, the bank contacts customers with interest-only mortgages to help them consider options for early repayment, reducing the number of customers reaching loan maturity in a negative equity position. Connect before they’re late ©2014 Fair Isaac Corporation. All rights reserved. 7 Back to main menu

©2014 Fair Isaac Corporation. All rights reserved. 8 Even good customers can end up in financial distress—how you treat them when they need help may affect their loyalty later on Use decision modeling and optimization to offer tailored payment plans and debt adjustments. Balance risk with long-term relationship value. A European bank offering optimized loan modifications has achieved these results: 27% > 47% Increase in take-up rates 35% > 10% Decrease in 6-month default rates Resolve delinquencies in a flexible manner ©2014 Fair Isaac Corporation. All rights reserved. 8 Back to main menu

©2014 Fair Isaac Corporation. All rights reserved. 9 Resolve delinquencies in a flexible manner FICO is helping a large US mortgage lender find loan modifications with better net present value (NPV) Projected benefit is conservatively projected at: $2,000 per loan modification x1,000 modifications per month Advanced analytics pinpoint the best modification for both customer and bank ©2014 Fair Isaac Corporation. All rights reserved. 9 Optimizing for Net Present Value 65% 55% 45% 35% 25% 75% 85% $240,000 $235,000 $230,000 $225,000 $220,000 $215,000 $210,000 $205,000 $200,000 242322212019181716151413121110987654321 REDEFAULTRATES&POSTMODHDTI NPV TREATMENT Baseline NPV Re-default rate Household debt-to-income ratio Optimized NPV Re-default rate Household debt-to-income ratio 65% 55% 45% 35% 25% 75% 85% $240,000 $235,000 $230,000 $225,000 $220,000 $215,000 $210,000 $205,000 $200,000 242322212019181716151413121110987654321 REDEFAULTRATES&POSTMODHDTI NPV TREATMENT Baseline NPV Re-default rate Household debt-to-income ratio Optimized NPV Re-default rate Household debt-to-income ratio Back to main menu See the decision model behind this optimized strategy

©2014 Fair Isaac Corporation. All rights reserved. 10 Take the guesswork out of collecting Collection scores +15–20% recovered amount Placement optimization +5–20% recovered amount Typical results from advanced collections analytics ©2014 Fair Isaac Corporation. All rights reserved. 10 Use predictive models not only to determine when accounts enter collections, but also how to most effectively treat them Collection scores predict which early-stage accounts are most likely to self-cure and which to roll. They rank late-stage accounts by the amount they’re likely to pay. Placement optimization makes data-driven recommendations for where to place accounts to achieve maximum results. Back to main menu See scoring example

©2014 Fair Isaac Corporation. All rights reserved. 11 Close the loop between data analysis, decisions, actions and learning from results „„ FICO is helping banks set up analytic learning loops to perform champion- challenger tests in shorter cycles. „„ One of the great advantages of automating collections contacts through intelligent omnichannel comunications is capturing operational results faster. So you can use them to help accelerate this process even more. Drive continuous collections performance gains Keep getting better, faster Assess Decide Act Resolve ©2014 Fair Isaac Corporation. All rights reserved. 11 Back to main menu

Take your collections performance to the top It’s where you ought to be. Learn more: Download the white paper on this topic: Insights #66: Five Imperatives in a Shifting Collections Landscape Check out our blog: Banking Analytics Blog For more information North America toll-free Latin America & Caribbean Europe, Middle East & Africa Asia Pacific www.fico.com +1 888 342 6336 +55 11 5189 8222 +44 (0) 207 940 8718 +65 6422 7700 info@fico.com LAC_info@fico.com emeainfo@fico.com infoasia@fico.com FICO is a trademark or registered trademark of Fair Isaac Corporation in the United States and in other countries. Other product and company names herein may be trademarks of their respective owners. © 2014 Fair Isaac Corporation. All rights reserved. 3055K 1/14 PDF

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