Today’s digital payments issuers face a mix of challenges. Increased competition is making it harder to attract and keep customers. Tighter regulation is pushing down on profitability. The need to digitize products and services is adding another layer of complexity. And, all the while, consumer expectations are edging upwards.
So, what can issuers do to respond?
One of the most effective strategies is to optimise the acquisitions process. In particular, there is an opportunity for credit risk teams to come together with colleagues from marketing and digital to re-engineer the way that new customers are targeted, evaluated and onboarded.
By combining skills from across its business, a digital payments issuer can approach the most promising potential customers with relevant products, premediated risk assessments, and instant, friction-free on-boarding. Importantly, the entire process can also be integrated and digitized, which adds to the efficiency as well as the effectiveness.
Intelligent targeting + friction-free onboarding
The first step is to get the targeting right, so the “right” person is approached with the “right” product and offered the “right” credit limit. And there are three categories of people to consider.
· People you already know – your existing customers
A bank can score its customer base to reveal the most promising prospects for a credit card.
Hard data, such as age, gender, employment details provide the basis for your credit check. Soft data, such as past account histories, transactional behavior or default rates, can add to the picture. And, by using this data intelligently, many banks realise they know more about their customers than they had assumed – and are able to pre-qualify them for a credit card right away, without the need for any further credit checks.
· People you don’t yet know – but who behave just like your best customers
Using digital channels, there are many new opportunities to effectively target non-customers, in a way that is aligned with your credit risk policies.
In particular, the more sophisticated social media platforms (such as Facebook and Instagram) enable you to target likely customers with unprecedented accuracy. For example, it is possible to identify and target a set of ‘lookalike’ consumers who closely resemble your most profitable cardholders. They are likely to be attracted by the same type of product and to behave in the same way.
· Targeting people new to banking – and may become great customers in the future
New techniques are also enabling credit card issuers to make better-informed decisions about the “new-to-credit” segment, or so-called “thin-file” prospects.
For example, some credit bureaus have begun to partner both with payment networks and telecom providers. And, by comparing the behaviors of “thin-file” applicants with their “thick-file” counterparts, assumptions can be made about their creditworthiness. There could also be an opportunity for a digital payments issuer to partner with an organization (such as a telco or mass transit operator) that has established some form of a billing relationship with people in this category.
In each case, the idea is to prequalify the customer to the extent that is possible, and also to capture as many details about them as possible – so that a credit decision can be made in real-time, and most of the fields on the application can be pre-populated.
It is also critical to make full use of the services and insights offered by the credit bureaus, even for your existing customers. Indeed, for most issuers in most markets, it is now standard practice to utilize real-time credit bureau data when assessing risk and affordability.
Four recommendations for optimizing your acquisitions
1. Cast your net wide
Customers who have an existing relationship with your organization will be a logical source of new business, but don’t restrict your focus to this group.
As well as using digital and social media channels, consider working with your existing partners or creating new partnerships – with an emphasis on those who have an existing billing relationship (such as a telco or a mass rapid transit operator), or those who are able to draw on demographic data that users have voluntarily provided (such as the operator of a loyalty program).
2. Right-size your credit assessments
It’s time to move on from those long, tedious credit assessments.
Today’s customers don’t have the patience – especially if they’re using a mobile and particularly if they suspect that, somewhere in your organization, you already have the answers.
For any recruitment campaign, work out how to capture data in the most painless way possible. Think about all the data fields that could be pre-filled. Think about those that could be filled once the initial decision is taken, as well as data fields that could be omitted altogether.
3. Be clear on what you already know, and what you need to find out
Whenever you embark on a recruitment campaign, do an audit of every piece of information you already have on your prospective applicants.
With a cross-selling campaign, you should have all of the necessary demographic data. You may also be able to derive the information you need from a customer’s previous behavior.
If you are hunting for new customers, think about how to use data capture techniques as part of your campaign mechanics (even if it’s just to gather a name, email address and post code). When selecting and working with partners, agree on the data they could contribute.
Our experience is that many banks underestimate how much data they already have – or they can deduce.
4. Explore the partnerships that could complement your acquisitions process
You don’t need to build or source all of the capabilities and data you need in-house. Instead there are plenty of partners who could help you find, reach out to and acquire your next group of customers.
For example, digital partners can improve customer targeting and on-boarding, while credit bureaus are likely to have a more holistic view of your applicants. You can also reach out to other companies who may already have a billing or usage relationship with potential customers.
And, of course, you can connect with Visa. We can provide you with a wide range of online tools and advice, which can help to refine your thinking and upskill your people. And there is always the option to collaborate with Visa’s credit risk and digital marketing experts on bespoke assignments.
To find out more about how to optimize the use of data and digital developments to acquire the best customers, speak to your Visa representative, or reach out directly to Visa Consulting and Analytics.