UNDERSTAND & PREDICT CONSUMER BEHAVIOUR WITH TRENDED DATA SOLUTIONS

Transcription

1 UNDERSTAND & PREDICT CONSUMER BEHAVIOUR WITH TRENDED DATA SOLUTIONS

2 PREDICT RISK AND REVENUE POTENTIAL WITH PRECISE, TARGETED INSIGHTS The best predictor of future behaviour is often past behaviour. That s the premise behind Equifax Payment Dimensions Plus, a trended data solution that goes beyond the snapshot approach of a credit score to provide a more granular and robust picture showing consumer behaviour patterns over a historical period of time. With a traditional credit report, you can see a customer s existing balance and determine whether they paid their bills on time but you may not be able to tell if they are consistently carrying debt loads on revolving accounts, such as credit cards, whether they pay their balances in full every month and even more importantly how that data is trending. As a result, two people with the same credit score at a specific point in time may appear to carry the same risk but the paths they took to arrive at that point could vary widely. Trended time-series data is a game changer when it comes to predicting a consumer s revenue and risk potential. It also enhances your ability to effectively reach consumers with new product offers and foster customer loyalty when you are able to segment your consumers based on their trended payments, balances and limits. This detailed customer picture can impact the decisions you make at every stage of the customer lifecycle, from targeting and acquisition, through to loan origination, account management and collections. WHO IS THE BETTER RISK? MARIA 30 years old, opened her own business 2 years ago that generates $75,000 in income SAM 35-year old Sales Rep at a large Pharma Company making $85,000 per year $18,000 car loan, $5,000 on credit cards (40% of limits) $20,000 car loan $3,000 on credit cards (60% of limits) $5,000 personal loan $2,000 on a RSP loan $275,000 mortgage on variable rate $250,000 mortgage on 5 year fixed $450,000 condo $400,000 home CREDIT SCORE 680 CREDIT SCORE 680 Imagine Sam and Maria. Both are current customers applying for a loan. Both have the same credit risk score; they have similar income and debt levels; and neither has been delinquent. Their position today might lead you to believe their credit risk is the same but trended data tells a much different story. If you consider their payment and balance histories, you will discover significant nuances in their profiles and therefore improve your ability to become more precise in your lending decisions.

3 TRENDED DATA MAKES VS A BETTER RISK MARIA SAM SAM SNAPSHOT CREDIT SCORE 680 Going down 680 Going up MARIA MARIA S STORY SAM S STORY Maria used her personal credit to start her new business After regularly paying off his credit card, Sam has started to revolve in recent months As the business has grown, she has been increasing her monthly payments His monthly payment amounts have been falling over the last 12 months She now pays in full every month and her card usage has fallen from 80% to 40% As a result, the utilization on his credit card has risen from 20% to 60% Equifax Ignite, our data-to-insights ecosystem, offers a wide variety of trended data attributes to address your specific business challenges. With this magnitude of information and computing power, we can move beyond traditional credit scores and unlock new, dynamic insights about consumer behaviours, needs and motivations.

4 TRENDED DATA OFFERS DYNAMIC INSIGHTS Trended (historical, longitudinal or time-series) data is an invaluable tool for gaining practical perspective into consumer behaviour. It works by measuring a sequence of data points at successive points in time spaced over uniform time intervals. Analyzing the data creates the opportunity to extract meaningful statistics and help predict future values based on previously observed values. magnitude of change within the profile can help provide valuable insight into consumer credit behaviour. From these data points a number of aggregated, trended calculations and triggers are used in combination with direct attributes to derive models and inform business strategies. Trended data uses both direct attributes and derived scores to paint a complete picture of a customer s credit behaviour over time: When measuring trended data within a consumer credit profile, analysis on direction, velocity, tipping points and PAYMENT DIMENSIONS PLUS % Change Standard Deviation METRICS COVER 3, 6, 12 OR 24 Slope Revolver/Transactor MONTH TIME PERIODS Max/Min Payment Rate Monthly Spend DIRECT ATTRIBUTES Direct attributes are calculations created directly from the underlying payment information to determine: Payment & spend behaviour Credit limit usage Total credit balances Payment history New credit & inquiries

5 DYNAMIC ATTRIBUTES YOU CAN LEVERAGE Balance Balance changes over time can be used to assess whether credit facilities are forecast to grow or decline and to evaluate the market opportunity, model current and future contributions as well as determine customer value. Limit Credit limits are assigned based on a consumer s payment and spend behaviour, as well as their current and future risk profile. Combined with balance information, an analysis of credit limits can help assess and predict how current and future credit facilities will be used. Limit can also be used to determine the score, understand market performance and assess potential exposure. Payment The amount and frequency of payments provide a strong indication of the credit holder s capacity to use credit over time. Trended data predicts future payments for calculating capacity, utilization and risk performance. Spend Spend calculations are important in understanding the use of credit facilities, the type of spending and the changes in spending against the limit. They can be used to evaluate and forecast potential spend at an account, individual and household level. Derived scores and models A number of calculations and models derived from trended data that can further leverage the relationship between the variables to offer you an actionable set of insights for marketing and risk management. Share of wallet Share of Wallet calculates current and projected growth across all credit products to understand a brand s penetration at an account, individual and household level. You can use Share of Wallet to determine the current position of your brand, predict future exposure and assess opportunities to reduce, maintain or grow customer relationships to optimize Return on Investment. Market segments When you segment your customers into transactors, revolvers, inactive and new consumers, you can more easily develop a framework for managing and deploying targeted customer strategies across the product life cycle from targeting and acquisition, through to loan origination, account management and collections. Customer value Customer value calculations can be used to refine acquisition, product management and customer strategies. This can also be used to determine the appropriate product, behavior and risk matrix to maximize customer value. Value Customer value is the calculation of current and future product value using the combination categories and risk profile to predict and segment consumers for credit products. Optimize the marketing mix across the product life cycle to refine acquisition, product management and customer strategies. Determine the appropriate product, behavior and risk matrix to maximize customer value. THE ADDED POWER OF COMPETITIVE BENCHMARKS On Us/Off Us analytics enables you to create a strategic framework to measure key drivers of business performance. This framework can greatly inform your strategies to increase customer holdings, improve share of wallet and influence spend behaviour in key segments. The market measures and benchmarks are configurable and reportable across product, consumer segments and geographies. The measures can also inform customer strategies and contact activities, measuring effectiveness of customer management and campaign activities.

6 USE PAYMENT DIMENSIONS PLUS TRENDED DATA TO: GO BEYOND TRADITIONAL RISK ASSESSMENTS Refine your risk underwriting and modeling strategies through the direct use of attributes and the development of enhanced scores and other insights to gain a more precise and predictive view of application risk and portfolio exposure. Having deep insights into a consumer s financial profile and behaviors over time can help you drive more profitable growth, while helping cut losses. Understanding the trajectory of consumer spending and repayment behaviors can help you: Identify prospects with your ideal risk profile Improve accuracy in risk models Assign risk-based pricing Monitor on-going account activities Improve segmentation OPTIMIZE MARKETING ACTIVITIES Integrating trended credit data into your marketing efforts can help you expand your universe of prospective customers by increasing application approvals and improving customer retention. Analyzing financial behavior over a period of time helps you better gauge the trajectory of consumer spending and repayment behaviors good or bad. Used in this manner, trended credit data can help you: Deepen relationships with existing customers by offering the right product to the right customer at the right time Determine which customers are more likely to respond to a specific offer Target customers that are more likely to repay a loan Fine-tune prescreen decisions Identify which customers qualify for a line extension, and more. Prioritize collections Predict propensity to pay Identify those more likely to default or declare bankruptcy Identify abnormal spending patterns to mitigate fraud and reduce delinquency Product managers and marketers will be able to use the insights from trended credit payment data to better manage and service consumers, create innovative products and enable a higher degree of consumer customization. A highly-targeted marketing campaign can lead to improved response rates, stronger returns on marketing investment and increased market share and revenue.

7 TRENDED PAYMENT DATA HELPS YOU: Improve accuracy in risk models Assign risk-based pricing Monitor ongoing account activities Improve segmentation Prioritize collections Predict propensity to pay Identify those more likely to default or declare bankruptcy Prioritize your marketable populations Optimize credit limit assignments Proactively manage marketing costs Drive marketing program efficiency Limit customer attrition Design attractive product offers and rewards DATA IN ITS MOST POWERFUL FORM ABOUT EQUIFAX Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers. Businesses large and small rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more. We empower individual consumers to manage their personal credit information, protect their identity, and maximize their financial well-being. Headquartered in Atlanta, Equifax Inc. operates in the U.S. and 15 other countries throughout North America, Latin America, Europe and Asia. Equifax s common stock is traded on the New York Stock Exchange under the symbol EFX. Contact your Equifax representative now to explore which products and services best meet your unique business needs. Equifax Canada Co., All rights reserved. Equifax is a registered trademark of Equifax Canada Co. Equifax Payment Dimensions and Equifax Payments Dimensions Plus is a trademark of Equifax Canada Co.

8 Powering the World with Knowledge DATA IN ITS MOST POWERFUL FORM Contact your Equifax representative now to explore which products and services best meet your unique business needs. CALL EQUIFAX TODAY US AT Equifax Canada Co., All rights reserved. Equifax and EFX are registered trademarks of Equifax Canada Co. Equifax Debt Services is a trademark of Equifax Canada Co. No part of this document may be reproduced, distributed, transmitted, transcribed, stored in a retrieval system, or translated into any language in any form by means, electronic, mechanical or otherwise, for any purpose, without the prior written consent of Equifax Canada.