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A new approach to the SME credit lifecycle
Lenders need to consider whether they can automate many processes related to SME customers to reduce the high costs of servicing a small business portfolio.
Reporting - What can it do for me?
A critical element of a Decision Analytics solution is the ability to access timely and accurate performance, portfolio and market information. Regular monitoring helps create understanding of how the business is performing, forecast the impact of strategies on profitability and highlight current and potential trends that require attention to maintain effectiveness.
Unfortunately, many organisations have to spend too much time accessing and manipulating data, thereby limiting the time available to interpret the report and act on the results. Or, they spend time producing detailed reports every month and analysing them in detail, only to find the solution is performing well and no action is needed.
How can we help you?
The insight Portfolio Reporting Studio provides offers the ability to maintain and improve the effectiveness of strategies and scorecards. Portfolio Reporting Studio is the integrated reporting tool for Decision Analytics. It uses built-in expertise to rapidly create detailed reports specifically designed for the key reporting requirements, which are summarised into results for high-level reporting on new business and portfolio performance, scorecard effectiveness and Basel II requirements.
A few key facts
- The reports are used from the top down, with user-defined alerts to guide users into the detail only when it is necessary.
- The tool provides immediate access to reporting at every level of the organisation, which provides the ability to monitor the performance of decision making within each portfolio.
- The insight it provides offers the ability to maintain and improve the effectiveness of strategies and scorecards, leading to improved overall business performance in terms of revenue, losses, costs and profitability.
Understand the impact business strategies and processes have on profitability today and forecast into the future
- Minimise the impact of issues with early warning of potential issues and on-going monitoring
- Reduce the opportunity cost of missing new revenue opportunities with regular and up-to date monitoring
- Forecast and monitor the impact of changing strategies on profitability, including Champion/Challenger strategies
- Reduce resource time and costs of creating reports, moving the emphasis from production to interpretation
- Achieve a higher quality of reporting with less investment using built-in expertise
Experian's Reporting allows high level user defined alerts and statistics highlight issues, so you can focus on what really matters
- Summary reports make management reporting clear and simple
- Reporting expertise is built in, it provides summary statistics and alerts for you, telling you exactly what you need to know
- The analysis is top-down and interactive, you can drill down into areas of interest to get the required detail
- You control the parameters and measures and can tailor them to your specific needs
- You can save up to 80% in data preparation time
The reporting areas covers:
Analysis of the quality and performance of the new customers taken on
Analysis of the profitability and performance of existing customers
Management information and analysis for Basel requirements
Monitoring the effectiveness and efficiency of the recovery and debt management operation
Monitoring the effectiveness and predictive performance of scorecards
Flexible ad-hoc tool for further analysis and interpretation
Rapid analysis and monitoring
Experian's Reporting provides a single repository with a relational infrastructure that has been specifically designed for rapid analysis and monitoring. It brings together all the different sources of information from the business across all decision points, significant events, customer contacts and transactions.
It offers the ability to gain insight from all levels of data, from event and transaction to customer and household. Analysis is carried out on the full population, with no need for data sampling or aggregation, enabling ‘train of thought’ analysis with no need to specify data variables before a report is started.
Experian's Reporting can be deployed as an integrated reporting tool or as a standalone tool supporting Decision Analytics across the organisation. The PC desktop environment has been specifically designed for complete flexibility and ease of use, providing the framework for the expert reports, providing tools to manipulate data and create libraries of analytical components.
Experian delivers experience and expertise gained from 350 reporting systems deployed worldwide. These services cover:
The strategies employed within the origination process need to be performing at the highest level in order to take on the right customers with the right terms. This enables the organisation to maximise return on investment and manage the profitability of the relationship.
Experian’s Reporting provides a high level summary, based on detailed analysis, provides information on the key elements of the new business process; the quality of business being taken on, the effectiveness of the decision process and the stability of the portfolio. This analysis, combined with the impact of each element on the portfolio creates an overall assessment of the new business process.
In addition, trend analysis can forecast future performance trends. More detailed analysis is provided by reports that look further into each aspect of the operation with alerts and forecasting to give early warning of potential issues.
Monitoring and analysis is a vital element of a customer management solution, providing insight into the impact of each decision on customer behaviour and business profitability. The reports give an overall picture of the portfolio in terms of revenue, costs, bad debt and profit contribution, at the current position and historically. The reports calculate the revenue, the monthly position and cumulative to date, highlighting any significant divergence.
Scorecards are an integral part of decision making. However, the ability to ensure scorecards continue to perform effectively over time is often limited due to data availability and the time needed for analysis. Experian’s reporting provides the ability to regularly monitor scorecards and ensure they are performing optimally. Potential issues are highlighted immediately, facilitating incremental development that maintains and improves the scorecard effectiveness.
Capital Adequacy reports
Once an organisation has developed and deployed the necessary models for Capital Accord, it is required to monitor the effectiveness of the models and measure the resulting capital requirement.
Experian’s Reporting is an integrated tool that provides immediate access to monitoring and reporting at every level of the organisation, with built-in reports for Capital Adequacy. The reports provide a total view of the retail and SME portfolios, minimising the effort required to meet the Capital Adequacy reporting requirements.
Responsible Lending and Affordability
The paper starts by examining recent trends in indebtedness and provides an overview of the main factors driving the responsible lending debate in the UK. It then describes how an automated responsible lending solution can be delivered using a new generic mechanism for estimating disposable income and assessing consumer affordability. Illustrations of how this new responsible lending mechanism works are provided for both mortgage lending and unsecured lending in the prime sector.
Although this paper describes a UK-based responsible lending approach, the lessons learned from the UK have implications for many other developed - and developing - consumer credit markets.
Responsible lending in the unsecured non-prime sector is also discussed. The ability to deliver truly automated responsible lending decisions has implications for all consumer credit markets and some recommendations are given for how this approach could be applied outside the UK.
Modelling personal bankruptcy in the UK
This paper outlines the impact of this increase in individual insolvencies, the research undertaken by Experian and the solutions derived from the research, which are now being adopted by UK lenders to identify and reduce losses from personal bankruptcies.
High levels of consumer indebtedness and the new provisions around personal bankruptcy contained in the Enterprise Act of 2002 have resulted in significant increases in the number of individual bankrupts in the UK.
The issue has become a high profile topic in the press and is seen as a growing problem for the UK economy. Prompted by this increase and the growing concerns of UK lenders about the bad debt caused by bankruptcy, Experian has carried out extensive research into the issue.
The research focused on the differences between bankrupts and other delinquent customers and considered how credit bureau data could be utilised to better identify customers who will become bankrupt in the future.
Over indebtedness and responsible lending
The paper outlines the indebtedness issue in the UK and details the results of the research, which has led to the development of a number of initiatives from Experian to support the responsible lending practices that are now being pursued by many UK lenders.
The last few years have seen an unprecedented increase in the demand and take up of consumer credit in the UK. Whilst this consumer credit boom has, on the whole, been very positive for the UK economy, there is now increasing concern regarding overall levels of consumer indebtedness.
This has been fuelled by a number of high profile debt cases reported by the mainstream media. In response to these concerns, the UK Government has set up an interdepartmental Advisory Group to tackle the over indebtedness issue and to encourage consumer lending to be more ‘responsible’.
As the UK’s leading Credit Bureau, Experian, and its Decision Analytics business, has invested heavily in research and development in this area, specifically looking into ways of enabling lending organisations to extend appropriate levels of credit that ensure benefits to both the lender and the borrower.
It is clear in undertaking this research that the depth of consumer data is key to developing the powerful indicators of indebtedness and affordability needed, and that full data sharing, where the Credit Bureaux hold all available consumer credit data, is highly instrumental in this process.