Managing credit cards is one of the most complex and also gratifying jobs. Unlike personal loans, auto loans or home loans, the levers that a bank has to play with are many, which adds complexity and also the ability to impact the business, making it more rewarding. We understand that.
What are some approaches to improve the customer experience in credit card management?
Usually, from a credit process management perspective, banks have distinct processes for underwriting, customer management and collections, and we believe it is important for all the processes to talk to each other, to make sure decisions are integrated. For example, for a low tenure customer, it is important for the origination scorecard to be an input to the portfolio scorecard. What I wanted to highlight here is, once a customer comes on board of a bank, we take plethora of decisions on that customer – SMS, E-mails, credit limit increase or decrease, pricing adjustments, and the basis of such decisions may not be emanating from one ‘source’. So the question becomes, is it necessary to make the ‘source’ common. If we do not, then we will run the risk of treating the same customer differently, which does not add a lot of business value. You do not want to receive a call from a bank asking to pay your balance when you had already received a SMS in the last two days congratulating you on a credit limit enhancement. Not a robust customer service. So, the key is where we can manage both these decisions from ‘one’ holistic view of the customer.
How can you improve risk decision-making for credit cards?
This is where we talk about a customer level assessment, meaning, we assign a credit score for a customer, and this is used to take judicious decisions. So, if a customer has got two or more credit cards, we will capture all the information, and rate the customer accordingly. These kinds of customer-level scorecards provide a good amount of discrimination month over month. But the question still remains, is this approach sufficient to provide the most accurate decision-making? Most will say yes, whereas I will agree to disagree. Let’s imagine this scenario, you hold a credit card with a limit of $1000 and a balance of $200 at the beginning of the month. Your credit score for this month is....
Atrideb Basu, Director Analytics
CRIF India
