News Column

Australia's Westpac Wins FICO Decision Management Award By Scoring Card Transaction Data Daily

July 8, 2014



SINGAPORE, July 9, 2014 /PRNewswire/ -- FICO http://www.fico.com/> (NYSE:

FICO), a leadingpredictive analytics

http://www.fico.com/en/resources/predictive-analytics/> and decision

management software company, today announced thatWestpac

http://www.westpac.com.au/>, Australia's second-largest bank, has won the 2014

FICO Decision Management Award in the Customer Growth & Retention category.

Westpac has deployed FICO transaction scoring across its 3 million credit card

accounts, changing the measurement of customer risk and attrition likelihood

from a monthly to a daily activity.

Logo - http://photos.prnewswire.com/prnh/20111010/CG83314LOGO

http://photos.prnewswire.com/prnh/20111010/CG83314LOGO>

Westpac is using predictive models from FICO that analyze daily card

transaction data to improve customer offers, authorize more transactions and

prioritize collections efforts. The solution is on track to deliver

approximately$6 million per year in increased revenue and reduced bad debt

expense.

"In a fiercely competitive banking market such as Australia, the main

financial players are fighting for share of wallet, with customer service as

the principal battleground," saidPaul Deall, senior manager of unsecured risk

at Westpac. "Improving the speed with which we can identify and act on changes

in customer behavior has given us an edge. Customer communication is also a

major contributor to account retention, so improving our reaction time has

helped us hold onto customers."

Westpac was looking to drive improvements in customer service for its credit

card base. At most lenders, decisions about which actions to take to retain a

customer, or which additional products to offer, are made once a month. Lenders

will score the customer's behavior over the previous month to inform decisions

and actions. Westpac thought that this approach was leaving money on the table.

"This monthly cadence allowed a four-week window in which we could

potentially lose business," said Deall. "A dialogue with the customer might

start six weeks after a change in spending patterns was observed - and that was

often too late."

After Deall attended a transaction scoring presentation at a FICO World

conference, Westpac worked with FICO to develop and implement a daily

transaction score across its credit card accounts.FICO predictive models

http://www.fico.com/en/products/fico-predictive-analytics/> and FICOŽ TRIADŽ

Customer Manager http://www.fico.com/en/products/fico-triad-customer-manager/>

enabled Westpac to use information derived from oceans of credit card

transaction data in order to comprehensively manage its card portfolio risk,

satisfy regulatory requirements, improve customer retention and drive customer

advocacy.

Since moving risk and attrition scoring from a monthly activity to a daily

one, Westpac can respond to changes in customer behavior more quickly. "For

example, through authorization decisioning, we are now making better decisions

on 1.3 million transactions, per month which enables us to minimise the chances

that our good customers will have a transaction declined," said Deall. "This

poor experience often leads to a drop in confidence in the product and an

increase in silent attrition, where customers just stop using the card."

Westpac is also incorporating daily transaction scoring to make its

collection scores more dynamic, allowing better prioritization of accounts and

better assignment of actions on overdue customers. To do this, Westpac uses

FICOŽ Customer Communication Services

http://www.fico.com/en/products/fico-customer-communications-services-originations/>

to execute collections communications via SMS or automated calls to customers,

based on decisions coming from the FICO TRIAD system. Closing the loop from

early detection of risk to rules-based communications has driven further

efficiencies and cost savings at Westpac.

The project took around 12 months to implement, from June 2012 to June 2013.

"The FICO solution is future-proofed and scalable," Deall said. "It has been

built on a hosted platform and therefore can be improved over time as new

features become available."

"Westpac has a reputation as a trailblazer, and they went against the way the

banking industry usually works by moving away from the monthly cadence to

real-time risk assessment," saidDavid Bannister, editor of Banking Technology,

who was one of the panel of independent judges. "With this project, they really

kicked down a few doors."


SOURCE FICO


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