Rapid Risk and Credit Decisioning: Here and Now - SAS · Mobile App Apply for Loan CD rates Credit Limit Decrease …EACH COMING FROM DIFFERENT BANK FUNCTIONS. ... •Prevention/detection

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RAPID RISK & CREDIT DECISIONING:

HERE AND NOW

LOCK KWEE YOONG, RISK PRACTICE LEAD, ASEAN

AUGUST 18 2015


W H Y ?

Challenges in Credit Operations

The Factory Approach

The Role of Analytics

Our Vision

Omni-Channels

A

G

E

N

D

A

The Journey

RAPID CREDIT DECISIONING

Awareness and Culture


Why?


THE EVOLUTION OF

DECISION MAKING A BALANCED APPROACH

STRATEGIC OPERATIONAL MARKETS

GLOBAL

OPERATIONS

PRODUCT

LINES

PRICING

DECISIONS


RAPID

DECISIONING THE SCIENCE OF DECISION MAKING FUELED BY….

• Rapidly Growing

Amounts of Data

• Increasing types

of connections

between

individuals/entities

• Powerful and

pervasive

analytics

Decision Management

Pervasive Analytics

Networks & Interactions

Growing Data


Challenges in Credit Operations


Ca

mp

aig

ns fo

r ne

w b

usin

ess

Pro

gra

ms to

ma

na

ge a

cco

un

t

Acquisition Demographics

Employment

Credit

Acce

pt/R

eje

ct/O

ve

ride

Products/

Services

Availed

Usage

Patterns

Payment

Patterns

Delinquency

rates

Write Offs

Collection

Win Back

Prospect Established Customer Former Customer

CUSTOMER ACQUISITION CREDIT MANAGEMENT

Multi-Channel

BI Reporting

Usually hours to days

Processing time

Usually months

Collection process

Credit Customer Lifecycle

New Customer

Application

Processing

System


Our Vision


Ca

mp

aig

ns fo

r ne

w b

usin

ess

Pro

gra

ms to

ma

na

ge a

cco

un

t


Employment

Credit

Acce

pt/R

eje

ct/O

ve

ride

Products/

Services

Availed

Usage

Patterns

Payment

Patterns

Delinquency

rates

Write Offs

Collection

Win Back



Multi-Channel

BI Reporting


Processing time

Usually months

Collection process


New Customer

Application

Processing

System

ANALYTICAL VISUALIZATION

OMNI Channel

Cre

dit S

co

ring

R

ap

id D

ec

isio

nin

g

Ma

na

ge

d R

isk L

eve

ls

Co

llec

tion

Op

timiz

atio

n

usually seconds to mins

Processing time

usually days to weeks

Collection process


RAPID DECISIONING :

IT IS HAPPENING NOW!

Many companies and industries including Public Sector are already building or has built this capability:

Public sector: tax & health Telco BtoB Financial services

http://www.sas.com/success/catalina.html

http://www.inps.it/portale/default.aspx


RAPID DECISION IN ACTION


RAPID DECISIONING IN

ACTION

In-Database Analytics is not an option.

Max Mustermann, CEO IT • ROI in three months

• Reduced risk

• Lower IT cost

Facts:

• 50% more productive analysts

• 55% reduction in costs

• Scoring 21 millions of customers takes

55 seconds instead of 3 hours

• Overall predictive analytics process

reduced from 9 months to 4 months

CHALLENGE TOP-BENEFIT

Solution

SAS RAPID

DECISIONING

• Cycle time from model conception to

model deployment was unsatisfactory

for 21st century

• Process was manual, error prone,

with little or no monitoring for model

degradation, and resource intensive.

• Analysts spending a disproportionate

amount of time on data management

John Oldham

European Head of Risk Analytics HSBC


RAPID DECISIONING:

Bank Otkritie Success Story


In House


External Data & Bureau Data

The Journey


RAPID DECISIONING:

ANALYTICS

ANALYTICS IS EVOLVING IT’S VALUE IN ORGANISATION

OPENING UP MORE POSSIBILITIES

Evaluative Analytics

Casual Analytics

Predictive Analytics

Role of

Analytics

Emerging Uses

Analytics uses are moving

toward growth and revenue,

its role is in expanding

customer insight, and its

value is in providing an eye

to the future.

Source: CEB, CEB TowerGroup Retail Banking, 2013.

Emerging Uses Traditional Uses

Gro

w th

e B

usin

ess

Ma

na

ge

Bu

sin

ess

Op

era

tio

ns

Mo

nito

r

Bu

sin

ess P

erf

orm

an

ce

Ris

k M

an

ag

em

en

t

Predictive Analytics

Causual Analytics

Evaluative Analytics

Value of Analytics


RAPID DECISIONING:

ANALYTICS FUTURE STATE ANALYTICS

* real-time high performance optimization * evolving models that learn and adjust based on new and emerging patterns in data * usage of rapid predictive modeling and best fit modeling techniques to enhance model lift and ensure recency * models leveraging both historical data and current data - accessed directly from either a database or directly from source systems (credit bureau, social media and unstructured data). * integrated modeling across business functions - marketing/claims/risk/fraud/opps/channels/finance - and the associated impact and prediction an action has across the business enterprise * customer baseline scores incorporating the whole of the customer's propensity, profit and forecasted needs

FUTURE




The Journey


RAPID DECISIONING: ‘ARTISANAL’ ANALYTICS

• Gives outstanding business results BUT: • Still a manual and

separate process managed by a few experts

• Relies on individual skills and performances

• Restricts Business-IT collaboration Process

• Cannot compress time for activities nor automate production tasks

• Cannot deal with near real-time responses

Time

• Cannot manage large volumes of complex data

• Cannot scale predictive analytics (segments, models, scores)

Data

Does not

scale

Does not

support

collaborat

ion

Takes too long


RAPID DECISIONING: FROM ARTISANAL TO ANALYTICS FACTORY

Streamlined Predictive Analytics and

Rapid decisioning Traditional analytics


RAPID DECISION: ANALYTICS FACTORY - HIGH EFFICIENCY &

EFFECTIVENESS

• Deliver more high-quality models with the same resources by efficiently managing a development process from sandbox to production involving many stakeholders: business, IT and experts

Process

• Reduce the latency by automating the process of development, production and maintenance of models and scores facing faster performance degradation

Time

• Seize the Big Data opportunity (volume, variety, velocity) and increase the frequency of Predictive Analytics by scaling your predictive analytics environment

Data

Streamlined the Predictive Analytics Process:

AUTOMATE

SCALE

MANAGE

Analytics

Factory

Manage high-

quality

models

Reduce latency

Scale with big data




Omni Channels

The Journey


RAPID DECISIONING:

OMNI CHANNEL

OMNI-CHANNEL BANKING IS BIGGER THAN THE

INTEGRATION BETWEEN CHANNELS

Omni-Channel

http://www.livingbiblemuseum.org/_images/FaceBook-Logo.png


RAPID DECISIONING:

OMNI CHANNEL

IT’S ABOUT MANAGING THE WHOLE CLIENT EXPERIENCE

ACROSS TOUCH POINTS

Omni-Channel

Including operational

functions

http://www.livingbiblemuseum.org/_images/FaceBook-Logo.png


RAPID DECISIONING:

OMNI CHANNEL

BECAUSE CLIENTS NEED A BROAD ARRAY OF THINGS FROM BANKS….

Overdraft

protection

Product

Information

Credit Trxn

Inquiry Report

Card Fraud Mortgage

Rates

Different

Payment

Options

Investment

Advice

Competitive

Product

Comparisons

Problem

Resolution

Supplemental

Insurance

Credit

Increase

More Days

to Pay

Password

Change

Branch

Information

Report travel

plans Add

Supplemental

Card Holder

Loyalty

Points

Credit

Consolidation

Loan

401K OLB Help Order Checks Balance

Transfer

Holds

Fund

Released

Link Acct

to Debit

Card

Report Debit

Fraud Make

Additional

Loan Pymt

Address

Change

Savings

Account

Mobile App Apply for

Loan

CD rates Credit Limit

Decrease

…EACH COMING FROM DIFFERENT BANK FUNCTIONS


FROM PRODUCT INFORMATION & ADVICE

Overdraft

protection

Product

Information

Credit Trxn

Inquiry

Report

Card Fraud Mortgage

Rates

Different

Payment

Options

Investment

Advice

Competitive

Product

Comparisons

Problem

Resolution

Supplemental

Insurance

Credit

Increase More Days

to Pay

Password

Change Branch

Informatio

n

Report travel

plans Add

Supplemental

Card Holder

Loyalty

Points Credit Consolidation

Loan 401K

OLB Help Order Checks Balance

Transfer

Holds

Fund

Released

Link Acct

to Debit

Card

Report Debit

Fraud Make

Additional

Loan Pymt

Address

Change

Savings

Account


Loan


Decrease

RAPID DECISIONING:

OMNI CHANNEL


TO FRAUD ASSISTANCE

Overdraft

protection

Product

Information

Credit Trxn

Inquiry Report

Card Fraud Mortgage

Rates

Different

Payment

Options

Investment

Advice

Competitive

Product

Comparisons

Problem

Resolution

Supplement

al Insurance

Credit

Increase More Days

to Pay

Password

Change Branch

Informatio

n

Report travel

plans Add

Supplemental

Card Holder

Loyalty

Points Credit Consolidatio

n Loan 401K


Transfer

Holds

Fund

Released

Link Acct

to Debit

Card

Report Debit

Fraud Make

Additional

Loan Pymt

Address

Change

Savings

Account


Loan


Decrease

RAPID DECISIONING:

OMNI CHANNEL


TO COLLECTIONS HELP

Overdraft

protection

Product

Information

Credit Trxn

Inquiry Report

Card Fraud Mortgage

Rates

Different

Payment

Options

Investment

Advice

Competitive

Product

Comparisons

Problem

Resolution

Supplement

al Insurance

Credit

Increase More Days

to Pay

Password

Change Branch

Informatio

n

Report travel

plans Add

Supplemental

Card Holder

Loyalty


n Loan 401K


Transfer

Holds

Fund

Released

Link Acct

to Debit

Card

Report Debit

Fraud Make

Additional

Loan Pymt

Address

Change

Savings

Account


Loan


Decrease

RAPID DECISIONING:

OMNI CHANNEL


TO CREDIT CHANGES

Overdraft

protection

Product

Information

Credit Trxn

Inquiry Report

Card Fraud Mortgage

Rates

Different

Payment

Options

Investment

Advice

Competitive

Product

Comparisons

Problem

Resolution

Supplement

al Insurance

Credit

Increase More Days

to Pay

Password

Change Branch

Informatio

n

Report travel

plans Add

Supplemental

Card Holder

Loyalty


n Loan 401K


Transfer

Holds

Fund

Released

Link Acct

to Debit

Card

Report Debit

Fraud Make

Additional

Loan Pymt

Address

Change

Savings

Account


Loan


Decrease

RAPID DECISIONING:

OMNI CHANNEL


TO OVERALL SERVICE & INFORMATION

Overdraft

protection

Product

Information

Credit Trxn

Inquiry Report

Card Fraud Mortgage

Rates

Different

Payment

Options

Investment

Advice

Competitive

Product

Comparisons

Problem

Resolution

Supplement

al Insurance

Credit

Increase More Days

to Pay

Password

Change Branch

Informatio

n

Report travel

plans Add

Supplemental

Card Holder

Loyalty

Points

Credit

Consolidatio

n Loan 401K


Transfer

Holds

Fund

Released

Link Acct

to Debit

Card

Report Debit

Fraud Make

Additional

Loan Pymt

Address

Change

Savings

Account


Loan


Decrease

RAPID DECISIONING:

OMNI CHANNEL


RAPID DECISIONING:

OMNI-CHANNEL BEYOND A CONSISTENT CUSTOMER EXPERIENCE

Ch

an

nel A

lig

nm

en

t w

ith

Cu

sto

mer

Exp

ecta

tio

n

Cross-Channel Consistency— Make all

channels capable of 24/7 service and

sales through consistency of experience.

Guided Channel Selection— From any point

of distribution, guide customers, based on

their unique profile, to the best part of the

bank to fit their need

Differentiated Development— Focus

channels on what they are equipped to do

best.

Quality of Channel Experience

Hig

h

Lo

w

High Low

Single-Channel Consistency—

Encourage customer to start and finish

all banking tasks within a single

channel.

1 3 2

Source: CEB TowerGroup research, Retail Banking Leadership Council

Channel Strategy by Experience and

Expectations


RAPID DECISIONING:

OMNI-CHANNEL BANK

THE CUSTOMER NEEDS TO BE CORE TO ALL STRATEGIES

Differentiated Service

Strategies

Personalized Marketing Strategies

Customer- Aware

Collections Treatments

Customer-Informed

Fraud Treatments

Customer- Driven Pricing

Customer-Level Credit

Risk Strategies




Omni Channels

The Journey

Awareness and Culture


RAPID DECISIONING

FUNCTIONAL SILOS CONTINUE TO IMPEDE CLIENT-

LEVEL STRATEGIES IN ORGANISATION

FR

AU

D

CO

LL

EC

TIO

NS


RAPID DECISIONING BUSINESS UNITS STILL LARGELY SERVING THEIR FUNCTIONAL MASTERS

Sample

Objectives

FR

AU

D

Co

llecti

on

s

Mark

eti

ng

RIS

K

Op

era

tio

ns

• Reduced bad debt

• Days sales outstandings

• Improved cure rates

• Improved client experience

• Marketing ROI

Response rate

• Incremental balances driven

from marketing

• CSI, NPS scores

• Internal service sat scores

• Operational efficiency

Loan Loss Rate

Write offs • Prevention/detection of multi-

channel fraud schemes

• Minimize false positives

• Drive operational efficiency

Sample

Customer-

Level

Analytics

Behaviour Scores

Bureau Scores

•Segment ID

(rev/risk/potential)

•Customer Propensity for

Product Cross/up-sell,

attrition etc.

•Triggers

• SAS Fraud Framework

• Falcon

• Lexis Nexis

• Manual review of overall customer

Sample

Systems

Enablers

•SAS Enterprise Risk Management

•FICO

• IBM

• SAS Enterprise Risk Management

• Techcom DRS

• FICO

• Largely Product-level vs

customer

Willingness to Pay vs Non

• Age of Accounts

• Risk-based pricing

• SCORE Statistics

•SAS Marketing Automation &

Optimization

•SAS Analytics

•Pega

•SAP

•Oracle

• Largely Product-level vs

customer

• Minimal connection of

customer X-product

(whether new or existing

client)

• Largely product vs customer

• Segment vs customer-level


RAPID DECISIONING :

CULTURE & AWARENESS

REQUIRES CHANGING ORGANIZATION BEHAVIOR &

CULTURE FOR RAPID DECISIONING TO HAPPEN..

Ca

mp

aig

ns fo

r ne

w b

usin

ess

Pro

gra

ms to

ma

na

ge a

cco

un

t


Employment

Credit

Acce

pt/R

eje

ct/O

ve

ride

Products/

Services

Availed

Usage

Patterns

Payment

Patterns

Delinquency

rates

Write Offs

Collection

Win Back



Multi-Channel

BI Reporting


Processing time

Usually months

Collection process


New Customer

Application

Processing

System

ANALYTICAL VISUALIZATION

OMNI Channel

Cre

dit S

co

ring

R

ap

id D

ec

isio

nin

g

Ma

na

ge

d R

isk L

eve

ls

Co

llec

tion

Op

timiz

atio

n

usually seconds to mins

Processing time

usually days to weeks

Collection process


SAS ROADMAP TO

RAPID DECISIONING

1.

Analytics

2.

Rapid

Decision

Engine

3.

OMNI

Channels


Questions?

Documents

Rapid Risk and Credit Decisioning: Here and Now - SAS · Mobile App Apply for Loan CD rates Credit Limit Decrease …EACH COMING FROM DIFFERENT BANK FUNCTIONS. ... •Prevention/detection