There is no doubt that the credit industry is constantly under the microscope from regulators and business commentators, but the pressures are also coming from within. Whilst margins and costs are squeezed ever downwards, there is also pressure to win more customers and grow revenues. Efforts to win new customers are beset with bigger challenges than ever, and they’re coming from all sides.
Meeting your regulatory obligations
The plethora of regulations – from anti-money laundering (AML) regulations, to know your customer (KYC) policies, even to Basel lll – mean credit providers are having to operate in a climate where the regulatory environment is becoming more onerous. Credit providers are required to offer only appropriate, affordable products – and show that they are sustainable as conditions change, interest rates or circumstances change.
Satisfying conflicting demands
Satisfying the conflicting demands to grow revenue within a more intense regulatory environment means customer acquisition is now more complex. Technology can provide companies with a wealth of data and it can be turned into a significant competitive advantage. High quality information can help credit and operational risk, product and acquisition teams manage risk and product offerings and provide the insight required to ensure you are offering products which are appropriate for customer needs. Having a detailed picture of a consumer can help satisfy the regulatory bodies and keep your new customers happy with the products they get, because they know, and you know, it is right for them.
Add intelligence to speed
Good quality and comprehensive data supports your efficiency and effectiveness. It speeds up customer acquisition by automating decisions, removing lengthy manual checking and potential inconsistencies. However, to make this process as smooth as possible, that data needs to be instantly available, up-to-date and accurate. Having the right information at the right time helps remove risk and helps you make the right decisions when providing facilities to customers. Ten years ago, a credit score and fraud check might have sufficed. These days, the requirements are far more demanding.
Credit providers now need to consider fraud and sanction checks, as well as credit scores, credit limits and affordability calculations. Then there’s the need to verify that the customer’s name, address, income, bank details and preferred contact method are all accurate. For those providers offering remote lending, banking checks and IP checks are a necessity. All this adds to the complexity involved.
Bigger, better, faster
While credit providers continue to wrestle with the traditional issues of increasing competition, regulatory pressures and cost, consumers are now far more demanding. Gone are the days when people were happy to fill in a credit application form and wait seven days or more for a response. Consumers don’t want to wait. They no longer sit back and hope for the best. Nor will they accept a higher rate, or being declined, without a full and clear explanation.
Today’s consumers are running at internet-speed. They desire access to credit and financial services through smartphones, tablets and all kinds of mobile devices. They’re used to hearing words like ‘instant’ from many new financial providers, and now they’re looking for fast decisions and instant gratification from you.
So what can credit providers do?
More demands mean more pressure. Having the right tools and processes, and having accurate, up-to-date, instantly accessible information in place is critical. Not only will this help provide consistency in checking and decision making, it allows you to provide the fast, simple and convenient procedures expected by customers. This improves your customer’s experience and helps you avoid customer complaints, reputational damage and increases your chances of cross-selling to them later on.
The fact is, putting your customers first enables you to build competitive advantage by delivering a best-in-class customer experience. Getting the first steps right is critical, because this will set the tone for the whole relationship. On the other hand, getting it wrong can open you up to losses and operational risk, including fraud.
Cut your costs, build your agility
High quality customer information, delivered via intelligent, flexible and accessible technology, can improve your efficiency, cost control and agility to seize new sales opportunities and grow – as well as demonstrating to the regulators that you are being a responsible lender.
Having a more detailed picture of consumers helps you make more informed and intelligent decisions about which customers you accept and for which products … ultimately keeping your business, the regulatory bodies and your customers happy.
Lead Consultant, Global Consultancy Practice, Experian Decision Analytics.
Nick Vanstone has over ten years’ experience in the credit industry working across the customer lifecycle, from originations, through to customer management and collections.
During this time Nick has delivered solutions and consultancy engagements including delivery of a Retail Banking Customer Management solution for all bank products, the development of a Basel solution for a High Street Bank SME portfolio and the merger of two major high street banks into one Customer Management Platform.
Nick has worked extensively in retail banking.