For newly formed companies, or for companies looking to expand their current product offerings, entering a new market can pose a risk. If you don’t have the ability to assess each applicant individually it can be difficult to set an appropriate strategy for taking on new customers. Without this, how would you know whether they would be the right customers that complement your current customer base, or aspirational customer base?
Assuming that each new customer you adopt in this process will behave similarly to how your current customers do will probably give a very inaccurate view which puts your success at risk and equally could dissatisfy the customer in the long-term relationship. Without the intricate detail of how they historically, or actually utilise their current credit can give you an unclear view of their disposable income.
Equally, when making an approach for a new applicant profile, you cannot assume these customers will behave the same as your existing customer base. Out-dated scorecards, that don’t reflect them ‘today’, or consider the economic changes since your last scorecard update can be ineffective at identifying the right customers for you to engage with and contact with your offer. Furthermore, this may not affect company performance only, but impact customers too; it is important that decisions are made with the customer’s best interest at heart, and responsible lending is imperative.
Generic samples of data offer clients the ability to develop strategies and build scorecards on retrospective applications, with performance metrics available on the accounts that have been taken-up. You can review a sample of data for the accounts relative for your proposed product offer and get a feel for the applicant profile based upon records from similar lenders. Alternatively a generic sample profile can be tailored to match the desired customer profile, providing a sample for you to inform whether you are best to review your existing scorecard performance or to develop a completely new scorecard.
By monitoring scorecard performance after implementation that considers the profile of the applications demographic you have received, the generic sample can be re-weighted and the scorecard adjusted based on the particular applicant profile. You can also continue to maintain the scorecard in this way until you have sufficient applications and analysis to develop a scorecard and strategy using your own applicants and accounts.
With Experian’s wide market coverage of most credit products, we are uniquely placed for providing this service. The use of this data for the purpose of forming a generic sample abides by the rules of reciprocity that form part of our data sharing compliance regulations and use of data. For more information on this, have you seen our previous blog; there is a wealth of data available, but what can be used?