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The advantages of Retail Portfolio Stress Testing
Impact of Interest Rates Rise
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Industry updates, insight and latest thinking for the credit industry
As your business strategies evolve it is imperative to understand the impact changes have on your customers.
Detailed in-house monitoring of portfolios is invaluable – but do the results reflect changes in strategy, economic, or overall market trends?
The availability of data is vast. But its true value is derived from analysing emerging trends and changes. For example, are you still relying on the same customer profiles as you were a few years back? Is your offer competitive and attractive to new, or current customers? Do you know how much of your product your customers are using compared to your competitors? Understanding the critical detail can help you to prioritise areas of your business strategy.
In an increasingly competitive environment and with the introduction of digital strategies – staying ahead will not only elevate your appeal, but ensure you continue to offer the right product to the right people.
- Do you know how your customers may be affected should interest rates rise? While it isn’t known when, it is certain they will. Certain segments of customers may be affected in different ways.
- Have your customers changed over time? Out-dated scorecards may be misrepresenting today’s customer. Reviewing your lending criteria, with a view of today, can ensure you are offering the right terms to the right people.
- Are you using the right contact channels? Optimising your strategy can enhance your message and ensure that your offer reaches the right customers in a way in which they will embrace and interact.
- What does the market look like? Accessing an independent unbiased view of the market based on quantitative analysis of data can help you understand more about the opportunities available.
- Understand customer affordability. There is no doubt that making prudent lending decisions is more important than ever, not only from a regulatory perspective, but to enable you to assess the affordability and suitability of lending terms.
- Tailor your strategy to the individual. Make better lending decisions by incorporating shared data from many other lending organisations into the score, to give a comprehensive ‘customer view’.