Shanghai bank approves 9 million credit card applications with FICO

Shanghai Pudong Development Bank (SPDB) Credit Card Center, a credit card lending pioneer in China, has increased its customer base using originations powered by technology from analytics software firm FICO. SPDB Credit Card Center’s total number of credit card applications using originations driven by a big data AI analytics strategy has exceeded 9 million, since January 2017. During this incredible growth, SPDB has maintained a controllable risk level while increasing its origination rate more than two-fold to 88 percent of applications.

For its achievements, SPDB has won the 2017 FICO Decisions Award for Customer Onboarding and Management.

FICO’s origination and big data AI analytics solution was introduced with the aim of overcoming the challenges brought by the rapid development of SPDB’s credit card business. One of the key limitations holding back speedy originations was the limited credit data available on customers.

“Using custom scorecards and models from FICO built using Big Data AI analytics, SPDB Credit Card Centre has managed to significantly improve its risk assessment of consumers with either thin files or no files at the People’s Bank of China credit bureau,” said Sandy Wang, managing director in China for FICO. “The coverage rate or scorable population of the FICO models built using big data AI analytics, covers more than 75 percent of applicants.”

Using the FICO solution has enabled SPDB to approve more people while controlling credit risk. Compared to SPDB’s control group, the FICO big data AI analytics strategy has delivered a 50 percent lower risk level but an approval rate that is four times higher.

Automating Collections

SPDB has also deployed a collections system from FICO, which has automated many tasks and freed human agents to work on high-value cases. FICO’s Customer Communication Services (CCS) solution incorporates machine learning and sophisticated analytics to deliver a collection service that can adapt to the specific requirements of the customer base.

The multi-channel solution can be optimised and adjusted on an ongoing basis, to meet the changing collection business objectives. It is estimated the solution is currently shouldering the volumes previously completed by 60 human agents while maintaining the same cure rate.

The CCS solution has allowed SPDB Credit Card Center to more efficiently utilise its team members on the more challenging collection work. It has also allowed the business to scale in a way that just would not have been possible if the bank had to find, train and deploy more people in the collections department.

SPDB Credit Card Center team continues to test new ideas and contact strategies using a champion / challenger methodology, which promotes successful “challenger” strategies that outperform the current “champions”. FICO Customer Communication Service therefore plays an important role in providing a closed loop for collection optimisation.

Previous to the FICO solution, SPDB was relying on outbound phone calls only. They now have a multi-channel customer engagement system in place for collections. This change helped keep the collection rates high through a clever and systematic system that allows the collections team to follow up with customers at the right time, using the right channel and with the right message.

Joy Macknight, deputy editor of The Banker, one of this year’s judges for the FICO Decisions Awards, said, “I gave SPDB top marks because of their customer-centric success. They are achieving great results by taking a holistic approach to risk management across originations and collections.”

“SPDB has harnessed analytic technologies to reduce their overall risk, greatly increase the proportion of automatic originations, increase approval rates and scale their collections,” said Sandy Wang. “They have skillfully created a data-driven and comprehensive origination optimisation strategy, using advanced decision science technologies and cutting-edge modelling experience from FICO. It has been a fruitful partnership and a project that has yielded significant results.”

Money Advice Trust helps more people in 2017 as demand continues to increase

The Money Advice Trust has today published its latest impact report which outlines the impact of its advice services, training and influencing work in 2017. The report shows that the charity’s National Debtline and Business Debtline advice services helped more people and small business owners to tackle their debts in the year than ever before, as demand continues to increase.

Making a difference: our impact in 2017 highlights the breadth of the Money Advice Trust’s work and the range of ways the charity helped people to tackle their debts and improve the money and debt environment during the year.

In 2017, National Debtline and Business Debtline advisers helped 169,700 people by phone, 50,600 via webchat and had over 1.5 million visits to its websites.

National Debtline provides free, impartial and confidential debt advice, and in 2017 helped 140,500 people over the phone. A further 43,500 were helped through webchat and there were more than 1.36 million visits to the National Debtline website. After receiving advice from National Debtline:
· 93 percent of callers were clear on the next steps to take
· 84 percent were less likely to find themselves in a similar situation
· 77 percent reported a positive impact on their emotional or mental health.

Business Debtline, the UK’s only free dedicated debt advice service for small business owners, helped 29,200 people on the phone, 7,100 through webchat and there were 167,300 visits to the Business Debtline website. After receiving advice from Business Debtline:
· 92 percent of callers were clear on the next steps to take
· 79 percent made contact with creditors themselves
· 86 percent felt they were less likely to find themselves in a similar situation.

The Trust’s Wiseradviser training programme for money and debt advisers, provided training places to 3,231 advisers in 980 free-to-client organisations across the UK, with 4,400 advisers using the Wiseradviser website to access training and learning resources. After training, 97 percent of advisers had increased confidence when advising clients and 94 percent shared their knowledge with colleagues.

In 2017, the Trust expanded its training and consultancy work with the credit industry to improve support for their customers in vulnerable circumstances. Training was delivered to 44 creditor organisations and 6,700 staff. After face-to-face training, 95 percent of staff rated their knowledge as very good or excellent.

The Trust continued its work to influence change in the UK’s money and debt environment. This included responding to 21 policy consultations and engaging with key decision makers on matters ranging from high-cost credit to local government debt collection – as well as raising awareness of debt advice and the issues facing people in financial difficulty through 2,166 items of media coverage.

Joanna Elson OBE, chief executive of the Money Advice Trust, said: “In 2017 we made a positive difference to the lives of more people and more small business owners in debt than ever before, growing our frontline services and further improving access through our digital channels.

“While our advisers continue to help thousands of people each week, demand for our services is increasing as the financial pressures facing many households remain.

“There are also changes on the horizon in the sector with the new Single Financial Guidance Body and the Government bringing forward its new statutory Breathing Space scheme. With the support of our many partners we will to do all we can to continue to help those that need our support most and work to improve the debt environment through these changes.”

StepChange Debt Charity comment on FCA retail banking review – overdrafts

StepChange Debt Charity notes that the Financial Conduct Authority today reports that bank overdrafts are significant drivers of profitability on bank personal current account business, and the regulator’s comment that “we have concerns that unarranged overdaft charges are more likely to be incurred by vulnerable consumers.”

The regulator says that over 30% of personal current account income to banks derives from overdraft revenue. It also found that the margins on overdrafts were significantly higher than on other areas of business – 28%, compared with 8% on credit cards and 5% on unsecured loans [pp 29-30 of FCA report].

Peter Tutton, Head of Policy at StepChange Debt Charity, comments: “Around 50% of our clients last year had overdraft balances running when they came to us. The FCA’s current scrutiny of overdrafts is very welcome, given that unauthorised overdrafts can be a higher cost form of credit than payday loans. The FCA recognises, the majority of unarranged overdraft charges are concentrated on just 2% of current account holders, and unarranged overdrafts are more likely to be incurred by vulnerable consumers. We strongly support the proposals in the FCA’s current consultation on overdrafts that firms should stop charging unauthorised overdraft fees and offer more help to people trapped in persistent overdraft debt. If implemented, these will help to significantly reduce the harm felt by people trapped in what can be a very high cost form of credit.”

Increase in credit card spending could indicate upcoming rent and mortgage affordability issues

Today’s UK Finance figures show credit card spending has risen considerably in May. This could be an indicator of affordability issues, which could have a knock on effect on people’s ability to keep up with rent and mortgage payments.

Mark Pilling, managing director at Spicerhaart Corporate Sales said: “UK Finance figures out today show that credit card spending was 2.3 per cent higher than a year earlier, with outstanding levels of card borrowing having grown by 5.7 per cent over the year. Credit card purchases in May were 193 million – this is well above the previous 12 month average of 181 million.

“While this could just be a good sign that retail sales are starting to pick up, perhaps as a result of the summer weather and the Royal Wedding, we all know the retail sector is currently struggling, so it could be an indicator of wider issues, that perhaps people are being forced to put more of their day to day purchases on credit cards.

“You can’t read an awful lot from one month’s data, but this is quite a significant rise and it will be interesting to see if this trend continues. If credit card debt does continue to rise, we need to be prepared for the knock on affect this may have on other areas, such as people’s ability to keep up with rent and mortgage repayments.”

Oblix Capital joins the ASTL

Oblix Capital, a specialist short term lender, has joined The Association of Short Term Lenders (ASTL) as a new associate member. Membership of the ASTL now stands at 35 full members and 29 associate members respectively.

Oblix Capital is a London based firm, specialising in bridging and development finance. Led by a team of experienced real estate professionals, Oblix Capital provides financial support for both commercial and residential properties throughout England and Wales. Oblix Capital offers a diverse funding base, providing financial flexibility and transparency to borrowers.

Andy Reid, Sales Director, Oblix Capital comments: “Oblix has experienced rapid growth since being founded in 2014 and we see our membership to the Association of Short Term Lenders as our commitment to provide the industry with the high-quality service it deserves.”

Benson Hersch, Chief Executive of the ASTL added: “The wealth of knowledge and insight Oblix Capital offers provides a strong addition to our growing membership here at ASTL. Their transparency and direct approach will certainly prove to be a real asset to our members.”

Experian secures FCA accreditation to supply Open Banking and PSD2 services

The UK’s largest credit reference agency, Experian, can now offer Open Banking and PSD2 (Payment Services Directive 2) services to enable the exchange of bank account information between people and organisations. The FCA has given it permission to operate as an Account Information Services Provider (AISP).

The accreditation allows Experian to help people and organisations benefit from the Open Banking initiative. A new suite of products will allow customers to share data in a secure and compliant way. This will complement Experian’s existing credit bureau services.

Tom Blacksell, B2B Managing Director at Experian, said: “This accreditation from the FCA underlines our commitment to support Open Banking. One bank has already signed up to use Experian’s Open Banking platform, and we’re running several proof of concepts with other clients so they can explore a range of innovative new services.”

Open Banking will help people to prove they can afford products, even if they have a limited credit history. When people choose to share bank account information with financial service providers they can receive the more appropriate products, improved services and better deals.

It will be a useful tool for organisations to ensure they only lend people and small businesses what they can afford to repay, while it will be useful to price comparison websites, brokers and background checking providers.

Open Banking will also help lenders to meet FCA regulatory obligations on affordability and reduce costs when processing applications. Adopting new data assets will be easier from both a technical and consumer support perspective.

In 2017, Experian acquired Runpath, a UK-based fintech company, which improves its ability to aggregate Experian data with external sources. Many of the UK’s leading price comparison websites use Runpath’s technology, and it has also been used to test the government’s Pensions Dashboard concept. New services will be brought to market using Runpath as Open Banking APIs continue to be implemented in the coming months.

Creditfix Ranks Among Top 20 Companies To Work For In Scotland

The UK’s biggest personal insolvency practice Creditfix has taken 15th spot in a major employee poll to uncover the best companies to work for.

Headquartered in Glasgow, the firm is the only debt advice specialist to appear in the 2018 “50 Best Companies to Work For in Scotland”, scoring high marks in three key areas – wellbeing, community initiatives and employee engagement.

Workplace engagement expert Best Companies, whose results are published in the Sunday Times, carried out the survey and used anonymous employee responses to generate the Regional Best Companies Index (RBCI) score.

Creditfix was praised for its positive office atmosphere, relaxing breakout areas, and its community outreach, which includes supporting mental health programmes at Motherwell Football Club.

The survey also revealed that 94 per cent of employees believe they can make ‘a valuable contribution to the success of the company’, and feel up-to-date with what is happening.

Commenting on the results, Andy Taylor, director at Creditfix, said: “We work with more than 75,000 clients across the UK, who are experiencing severe financial difficulties and all the emotional stress that brings. It’s therefore crucial that we look after our employees and ensure their own health and wellbeing is not negatively impacted.

“As well as providing health insurance and tickets for music and sport events, we have created a working environment that enables staff to take time out when needed, and also get out of the office to volunteer.”

Last month, Creditfix announced plans to expand with a second office in Salford, Greater Manchester with the creation of up to 50 new jobs in the region.

“This is a really exciting time for us, and we’re looking forward to establishing ourselves as an attractive place to work in Salford,” added Andy.

Why should being vulnerable have to mean being worse off?

In 2017, one in five clients of StepChange Debt Charity had an additional vulnerability (such as illness), on top of their problem debt. New analysis from the charity now shows that they tend to be in a notably worse financial position than other clients. This underpins the importance of the financial sector’s current focus on vulnerability, and cements the charity’s view that better safety nets are needed to prevent vulnerable people from suffering disproportionate difficulty.

There are many reasons for vulnerability, according to the new analysis in Breaking the Link: a closer look at vulnerable people in debt. Among the charity’s vulnerable clients, the overwhelmingly most common reason was mental health difficulty (43%), followed by physical disability (4.7%), cancer (4.6%), and poor health (4.1%).

Debt problems are closely associated with certain forms of vulnerability, especially illness. 77% of clients with a terminal illness, and 68% of clients with cancer, cited illness as the main cause of their debt problems. Among those with mental health issues, 40% said illness was the main reason for their debt. Two in five vulnerable clients overall said that the main reason for them falling into debt was illness.

However, vulnerability can derive from situations, as well as personal characteristics – bereavement, relationship breakdown, poor treatment by firms and many other features could all make someone vulnerable at certain times, even if the vulnerability is temporary.

Vulnerable clients were significantly more likely than other clients to have a net household income of under £10,000, and significantly less likely to have a net household income over £20,000. 45% of vulnerable clients had a deficit budget (with less money coming in than going out), even after budgeting advice, compared with 30% of clients as a whole.

Over two thirds of vulnerable clients were receiving benefits, compared with half of those clients without a vulnerability. Yet their benefits were less likely to prevent them facing a budget shortfall, with 40% facing a deficit budget compared with 37% of those clients without a vulnerability in receipt of benefits.

Vulnerable clients were more likely than other clients to be in arrears on household bills such as rent, utilities, or council tax. And they spent an average of 70% of their income on essential household bills and food, compared with 65% among other clients.

Commenting on the findings, StepChange Debt Charity chief executive Phil Andrew said: “Among our clients, those who are vulnerable typically show higher levels of financial distress – but that shouldn’t be inevitable. While there has been progress, it’s clear that the finance sector, regulators and the debt advice sector could all still do more to help break the link between being vulnerable and being significantly worse off. There are questions, too, for Government. With mounting evidence that vulnerable people are not always being adequately supported in their times of need – including the DWP’s own recent survey on the impact on claimants of Universal Credit – it is only reasonable to ask whether changes to the welfare system are creating too many negative and stressful impacts on people who are least in a position to deal with them.”

Bank of England’s warning on 0% credit card deals signals growing concern

Following the Bank of England’s recent letter warning about the growing risks attached to the provision of 0% credit card balance transfer offers,

Daoud Fakhri, Principal Analyst at GlobalData, a leading data and analytics company, offers his view on what this means for credit card providers: ‘‘For the second time this year, the Bank of England has warned lenders about making unrealistic assumptions about their 0% credit card balance transfer portfolios. The Prudential Regulation Authority sent out a letter on 6 June warning that some credit card providers with high exposure to the 0% balance transfer market may be guilty of overly optimistic assumptions about customer retention rates, thus impacting on calculations of Effective Interest Rate (EIR) income.

‘‘Virgin Money, currently the subject of a takeover bid by CYGB, has made an aggressive play in the balance transfer market – it currently offers a 36 month 0% deal, one of the longest on the market – and consequently has an above-average reliance on EIR as an income source. This will leave it more vulnerable than most, should customers reduce their debt exposure more quickly than expected.

‘‘However, this is an issue for the whole industry, and credit card providers would be well advised to act on the PRAs advice to review their EIR assumptions and consider applying interest income-at-risk limits. Should the economy continue to underperform, consumers are likely to become increasingly risk-averse and reduce their indebtedness. Consequently, providers that have been banking on a given level of interest income will have to contend with a significant shortfall.’’

Stonebridge Group records record month for mortgage apps

Stonebridge Group, the mortgage and insurance network, has today (14th June 2018) announced its best ever month for mortgage applications with its advisers last month seeking £800 million of loans for clients.

May’s figures showed a considerable 16% month-on-month increase from April, with the previous best month for Stonebridge being back in February this year.

Stonebridge’s year-to-date figures for mortgage applications also show an overall 16% increase on the same period in 2017.

The network puts the increase in application business down to an increase in productivity from its advisers and AR firms, plus a 4% increase in the average mortgage applied for.

Mortgage application business was split between 55% purchases and 45% remortgages/product transfers.

The record month shows Stonebridge Group bucking the wider market trend with the Bank of England recently announcing that the number of new mortgage ‘commitments’ agreed by lenders had fallen to £61.1 billion in Q1 2018, a 5.9% drop on the previous quarter. This was the lowest amount since Q1 2016.

The network has close to 550 active advisers, spread across 250 AR partner firms; a further 16 advisers are currently in the network’s pipeline and will be brought under its umbrella shortly.

Jo Carrasco, Business Partnerships Director at Stonebridge Group, commented: “Despite some of the general market figures coming out of the Bank of England for recent months, and the year to date, we have had a very strong start to the year in terms of mortgage activity. Our applications continue to move upwards and to post a record month in May, following similar activity levels throughout 2018 is very pleasing.

“Productivity from advisers within the Stonebridge Group is predominantly the reason for this, coupled with an increase in the average loan size, and it’s clear there is a growing demand for mortgage advice from the general public, particularly given the increased complexity and the fact that clients want access to the whole of market.

“It’s for this reason that we are worried by some of the measures proposed in the FCA’s recent Mortgages Market Study Interim Report. The benefits of advice should be clear to all, and the fact the regulator appears to think lenders have over-egged the pudding in terms of following MMR is not helpful. Our advisers provide a quality service with the added protection that advice offers; for the regulator to be supportive of a process which pushes more consumers via direct channels and makes it easier to conduct execution-only business is a retrograde step, and should be resisted by all within our industry.”