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.
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.”