ICICI Bank, India’s second largest bank, has announced that it is to implement customer level behavioural scoring from Experian Decision Analytics.

By adopting a customer level approach, the bank will be able to take an holistic view of each individual customer across all the accounts that they operate. This solution will enable the bank to deploy even more effective strategies across the customer lifecycle, helping it to manage risk whilst at the same time further enhancing its delivery of customer service and customer satisfaction.

ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through its network of over 685 branches, for investment banking, life and non-life insurance, venture capital and asset management.

“Retail banks like ICICI Bank typically have multiple customer relationships, with each individual often having a current account (money transmission), savings and credit products,” said Stephen Denby, Managing Director of Experian Decision Analytics EMEA.

“If an organisation views each customer based on the performance of each account, the management strategies may be inconsistent or even inappropriate. For this reason leading retail banks around the world have adopted customer level behavioural scoring solutions that allow them to aggregate a customer’s accounts and take a complete view of how the customer is behaving.”

This process offers two significant benefits. Firstly, it allows the bank to improve its debt management practices and, secondly, it enables it to communicate with the customer as an individual, not just a series of accounts, which significantly improves the customers’ experience of the service provided by the bank.

“We have been using scoring techniques for many years at ICICI Bank but it has always been purely at the account level,” commented Maninder Juneja, General Manager at ICICI Bank. “We are growing rapidly and have an ever increasing portfolio of accounts. We recognised that we needed to take a more complete view of each customer and see significant benefits in adopting customer level scoring. It will help us to enhance our complete customer service offering, something that ICICI Bank prides itself on, but at the same time we will gain even tighter controls that will help us manage debt and control operational costs. Experian Decision Analytics has a proven pedigree in delivering customer level solutions globally and it offers a level of international best practice that fits with our business ethos.”

Denby added: “Experian Decision Analytics has worked with retail banking organisations for many years and through this, we have developed expertise in customer level scoring. We incorporate all levels of account information in order to maximise the benefit of the relationship data available, including cash flow variables and customer indebtedness measures, to produce highly predictive and effective solutions. We are pleased to be supporting ICICI Bank in its continued development as a leading organisation in the Indian banking market.”

	Bank Renaissance Capital, part of Renaissance Capital Consumer Finance Group and one of the fastest growing consumer lending banks in Russia, has achieved a significant decrease in its fraud rate – over 20% on average – due to the implementation of Hunter, the fraud detection solution from Experian-Scorex.

Since February 2006 when the Hunter solution was put into operation, Bank Renaissance Capital has been able to decrease fraud rates for general purpose and car loans by 25% and 20% respectively, without increasing its operational costs by keeping a stabilized referral rate at 5-10% level.

Fernando Silva, Chief Risk Officer of Renaissance Capital Consumer Finance Group and member of the Board of Directors of Bank Renaissance Capital, commented: “The deployment of Hunter has already made a huge impact as it has helped us to avoid losses, save time and money and maintain a low cost of operation. Hunter gives us the flexibility to adapt the system and rules to combat new fraud trends so we always stay one step ahead of fraudsters' increasingly cunning tactics. It also integrates well with other technologies for risk management.”

Renaissance Capital Consumer Finance Group entered the consumer finance market in 2003, launching its first range of consumer products in 2004. A decision was made to also invest in leading technology for fraud prevention. The main challenge was to implement a solution that highlighted inconsistencies in application data in a quick and user-friendly way. In January 2005, Renaissance Capital Consumer Finance Group selected Hunter due to its flexibility, as it takes into consideration all the organisational specifications, the wide range of types of fraud and the fact that it can be easily amended depending on performance results.

Hunter has been implemented in a real-time, online environment, integrated with the bank's application processing system. As a result, decisions on genuine customer applications can be made automatically and new business rapidly accepted, while suspect fraudulent applications are highlighted, investigated and can then be declined, preventing fraud losses from occurring in the first place.

Daniel Zelenski, head of Experian-Scorex in Russia , added: “The credit business is very dynamic and we are currently working on a project to introduce a national fraud detection solution in Russia based on Hunter technology. This service will be available this year. Identity theft and application fraud are the world's fastest growing financial crimes and there is also a significant fraud threat in Russia . Hunter will help the credit market tackle fraud head on. Hunter is already well established in the UK , South Africa and Australia and is available to all credit markets worldwide.”

Simon Harben, Head of Global Analytics An Experian-Scorex white paper South Africa has experienced a huge boom in consumer credit over the last few years, driven by a healthier economy and increased access to credit by South African consumers.

The current credit landscape combined with legislative requirements has highlighted the need for the prevention of reckless lending and consumer overindebtedness.

However, this concern is not only limited to South Africa and other developing economies but is also evident in established markets. The United Kingdom, for example, has tackled similar issues in the recent past.

In this white paper, Experian, as the UK 's leading Credit Bureau, and Experian-Scorex, have invested heavily in research and development in this area, specifically looking into ways of enabling lending organisations to extend appropriate levels of credit that ensure benefits to both the lender and the borrower.

It is clear in undertaking this research that the depth of consumer data is key to developing the powerful indicators of indebtedness and affordability needed, and that full data sharing, where the Credit Bureaux hold all available consumer credit data, is highly instrumental in this process.

This paper outlines the indebtedness issue in the UK and details the results of the research, which has led to the development of a number of initiatives from Experian-Scorex to support the responsible lending practices that are now being pursued by many UK lenders.

While it is true that greater data sharing should improve the ability of lenders to lend responsibly, on its own it cannot guarantee it. The way in which shared data is actually used in practice is key to this, as is the ability for lenders to assess each individual's ‘affordability' in an efficient, effective way. This improved use of shared data to make better informed, and automated responsible lending decisions is the main focus for this paper.

For a copy of the full document click here.

Credit risk strategy evolution – The Risk Manager's perspective

Identity theft is when someone gets hold of your personal information without your permission. This can include your name, mother's maiden name, date of birth, current and previous addresses, phone number, bank account details, credit card or debit card PIN or your ID number.

This information is then used to commit a crime, usually by getting goods or services fraudulently. This may involve using stolen or forged identity documents, such as your drivers licence, or just a few pieces of your personal information. Your identity may be in danger when you:  

There are various ways to keep your identity safe, these include shredding or destroying information containing personal information, do not give out personal information over the phone if it is a source you cannot trust, keep your bank details safe, never let your credit card or debit card out of sight and importantly checking your credit report on a regular basis.

Click here to receive the full copy of this leaflet which will help you take steps to look after your identity. And if you do become a victim, it will help you spot any fraud early and deal with it quickly.

Banks agree to Code for responsible credit extension

The following provisions are contained in The Code:

• At the commencement of the discussion, the banks representative will advise customers that this is about an offer of credit, and ask whether they would like to continue the conversation. If the answer is “no”, they will terminate the conversation immediately. They will also terminate the conversation at any time thereafter if customers indicate that they are not interested in the offer, or decline it.

• Banks will only contact customers to offer credit where they have assessed that, on the information available to them, they probably have the ability to repay the facility (on the basis contemplated in the NCA).

• For the avoidance of doubt, banks will tell such customers, upon first contact, that, on the information available to them, the preliminary assessment indicates that they probably qualify for the product that is being offered to them, and that should they accept the offer, they will be taken through the appropriate credit vetting and Financial Intelligence Centre Act (FICA) processes.

• Customer contact for credit selling purposes will only be made between:
08h00 – 19h00, Monday to Friday
08h30 – 13h00, Saturday

• Salespeople will exercise their best endeavours not to contact the customer for purposes of selling the same lending product more frequently than once every two months (excluding one follow-up contact on an offer made) unless with the consent of the customer, and subject to legal requirements such as client confidentiality. They will record all outbound call centre campaigns, and if they undertake to revert to the customer or potential customer, must do so within 5 working days.

• They will comply with all relevant legislation and agreed Codes of Practice.• The above principles will apply to existing and potential customers, and will remain in force as a
minimum standard even after the National Credit Act has come into force in June 2007.

• All communication channels are covered by The Code. These include Direct Mail, Call Centres, SMS, e-mail, fax. Banks will regularly perform quality checks to ensure that we are complying with this code in all communication channels used by us.For existing customers banks will:

• Only attempt to sell credit to customers once satisfied with their credit standing and performance as recorded by the credit bureaux.

• Ensure that the credit bureaux records of customers are regularly and accurately updated in respect of all credit agreements on the banks books.

• Only make an offer that is based on an estimate of the customer’s ability to repay the facility, utilising the customer’s last known salary and other available internal customer account information as well as the customer’s debt obligations listed by the credit bureaux. they may not over-sell in the context of the limits of that ability.

• During contact, confirm the identity of the target customer.

• Ensure that product is explained and that an explicit decision regarding the product is obtained from our customer.

• For new customers, banks will:

• In assessing potential customers, only contact them when we have been able to assess their ability to repay the proposed facility, utilising publicly available information. They will not over-sell in the context of the limits of that ability.

• During contact, ensure that the product is explained and that an explicit decision regarding the product is obtained from the potential customer.

• Record the call and ensure that any necessary documentation is produced and where required, signed by the customer, including the Terms and Conditions.

• During the call, explain all regulatory requirements (e.g., FAIS, FICA, etc).

• Ensure that funds will only be released once the necessary documentation has been signed by the customer.

Coovadia points out that The Code is an interim measure, in the sense that it is the intention to incorporate all the important provisions therein into a revised Code of Banking Practice.

He says that while all members of the Banking Association have agreed to this Code, it is important that all other major providers of credit commit themselves to a similar code.

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