Prescreen and Credit Risk Labs: Increasing Number of Accounts Per Consumer

Financial institutions (FIs) know the value of gaining customers with low-risk accounts and services. Most often these are demand deposit accounts (also known as checking accounts). Through these accounts FIs build relationships with consumers and build the trust necessary when the consumers want to apply for additional products, such as a mortgage or auto loan. There is software available that aids in the optimization of the account opening process resulting in higher customer satisfaction and profitability for the FI.

Instant prescreen is a process that takes place at the time of consumer interaction; this can be in the branch, online, over the phone, or on a mobile device. Instant prescreen determines the best offers for existing customers based on their history and allows the institutions to maximize the wallet share of customers that already hold one or more accounts and do so at an extremely low cost. Instant prescreen also tracks the offers that have been made to the customer previously and whether or not they were accepted. With alternative credit data available, FIs are able to get a more holistic view of the consumer and make an offer based on that information. Because the offers determined by instant prescreen are catered to customers on an individual basis they are more likely to be accepted. For financial institutions this is beneficial because the more accounts a consumer has the less likely the risk of attrition.

Credit risk management software helps FIs model platform changes in realtime without the delays incurred in traditional processes. They are able to use past transactions to simulate what happens when decisioning platforms are altered. This software is able to return results in a matter of hours, versus the traditional method which could take months. It is a way for FIs to substantially decrease the risk associated with using new credit attributes, as the new attributes are tested using real performance data before they are implemented. In relation to account opening, credit risk management software is available to help FIs test various decisioning platforms to find out which attributes, scorecards, etc. need to be modified to help the institution better meet its goals and respond to external changes quickly.

Financial institutions have two distinct ways to increase the number of consumer accounts: gain customers that had no previous account and expand the number of accounts per existing customer. With instant prescreen software, FIs are able to take the data about an existing customer and make an offer that they are most likely to accept. With credit risk management software, FIs are able to simulate models that may be more predictive for evaluating credit risk. Credit risk management software and instant prescreen have both cut down on processing time dramatically and provide timely, accurate results.

Kelty Wallace is an online marketing intern at Zoot Enterprises in Bozeman, Montana.

Source: http://ezinearticles.com/6317953

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