The Business Challenge
How do you parlay your substantial base of deposit customers into a portfolio of quality credit card accounts?
The bank wanted to expand their card portfolio while minimizing their risk by cross-selling to existing account holders.
Their goal was to open 75,000 new credit card accounts within the next 12 months. The challenge was to tailor offers to deposit customers based on projected risk.
After being referred to Fractal Analytics by another client, the bank asked us to analyze and profile the risk and response propensity of their deposit customers. "Rather than sending out a blanket offer, we wanted to show our customers that we're aware and responsive to their needs," said the client's VP of Marketing.
We collected data on more than 2.5 million deposit accounts. In addition to demographics, our analysts looked at:
Based on our extensive global experience with credit card behavior our scientists developed credit card risk predictions from deposit history.
"What we learned is how important consistency in deposit balances drives high-value and low-risk credit card behavior," said Pranay Agrawal, co-founder and EVP Global Consulting and Account Management.
We also calculated a response score, identifying those who would be most and least likely to accept a credit card offer. Finally, our analysts created a dashboard so that the client could easily visualize different targeting scenarios and the downstream impact to risk and response simply by changing a few variables.
Because Fractal Analytics took a complex set of criteria and distilled it into two meaningful scores, the bank was able to tailor specific offers to their target customers. Those with low-risk/high-response scores were presented with more attractive interest rates and terms. In fact, 99,000 crème de la crème account holders received a pre-approved offer. The high-risk/high-response group received a higher interest rate offer.
Applications started rolling in right away and the responses kept coming… and coming… and coming. By the end of 12 months, the bank had opened 200,000 new credit card accounts, more than doubling their expectations.
We also helped the bank drive incremental loyalty by better understanding their customers and extending their deposit customer relationships.