"Asian lenders are quickly embracing the notion of having to do business with customers, not accounts," McConaghy said. "Yet while many banks in Asia Pacific are beginning to adopt customer-level decisioning, there is increased urgency to improve on these efforts and shift away from over-reliance on new customers, fees and credit limit increases to drive growth."
This need to expand customer-level decisioning and increase customer profitability was echoed at the recent third-annual FICO APAC Chief Risk Officer Forum, a gathering of more than 30 risk officers from retail banks around the Asia Pacific region. Findings and discussions from this closed-door meeting held last week, highlighted the increasing role of risk officers in enabling profitable growth through a more fine-tuned risk assessment of a customer across accounts and products.
"Customer-level management is not a new idea, but for many Asian banks it's still a vision rather than reality," said Dr. Andrew Jennings, chief analytics officer and head of FICO Labs. "To keep pace with the front-runners, banks still operating in product-specific silos will need to move ahead with data integration initiatives, harness the techniques and technologies of Big Data, and tap additional data sources such as transaction data on existing current or DDA accounts."
Banks should not be intimidated by the idea of achieving a 360-degree view of the customer. As Dr. Jennings told the risk officers in attendance at the forum, there are usually 20-30 aspects about each customer that a bank needs to understand. These will provide the basis for 80% to 90% of the profit lift.
Concurring with opinions of risk officers at the FICO APAC Chief Risk Officer Forum was Cyrus Daruwala, managing director, Asia Pacific, IDC Financial Insights, who presented recent survey findings on the predicted uptick in spending that will occur as Asian lenders attempt to improve customer profitability while complying with numerous governance and compliance measures. In fact, IDC predicts that banks that are not using fully integrated customer management systems will end up spending as much as 40% more in risk and compliance spending alone.
"Even today, the level of data integration happening in many Asian banks does not allow the pulling of relevant data into one single customer view," said Daruwala. "This means many risk officers – 60% according to our research – do not have a single view of their business with a customer, at a time where more financially sophisticated and demanding consumers will overturn current transactional norms. Emergence of multiple channels will further stretch customer management, so bank risk officers are increasingly interested in FICO's analytics-driven solutions that can be coordinated across divergent business lines and products, with the end goal being deeper and more sustainable relationships with existing customers."
About FICO: FICO (NYSE: FICO) delivers superior predictive analytics solutions that drive smarter decisions. The company's groundbreaking use of mathematics to predict consumer behavior has transformed entire industries and revolutionized the way risk is managed and products are marketed. FICO's innovative solutions include the FICO® Score — the standard measure of consumer credit risk in the United States — along with industry-leading solutions for managing credit accounts, identifying and minimizing the impact of fraud, and customizing consumer offers with pinpoint accuracy. Most of the world's top banks, as well as leading insurers, retailers, pharmaceutical companies and government agencies, rely on FICO solutions to accelerate growth, control risk, boost profits and meet regulatory and competitive demands. FICO also helps millions of individuals manage their personal credit health through www.myFICO.com. Learn more at www.fico.com. FICO: Make every decision count™.
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