The UK's Co-operative Financial Services (CFS) has installed CRM technology from Experian which provides an up-to-date risk assessment of all customers and highlights any changes in financial status. The implementation comes amid rising concerns among banks about high levels of personal debt and the impact of individual voluntary arrangements (IVAs) on credit quality.
The Co-op has deployed the latest version of Experian's Delphi for Customer Management (DCM) technology to identify events that may indicate a change in customers' financial status.
The system provides regular, up-to-date risk assessment of all customers as well as a 360-degree view of customer borrowing trends and highlights any changes in a customer’s borrowing status. The bank is also using the latest generation of Experian's customer management scores.
Experian says the implementation has allowed the bank to divide customers into sub-groups in order to apply the appropriate lending and contact strategies. This enables greater assistance to be provided to those customers who may be getting into general financial difficulty.
Howard Price at CFS, says the Experian technology "will allow us to offer the right product to the right customer, ensuring debt is kept manageable, helping us to identify potential problem customers before their debt problems get out of control".
Peter Brooker, director, Experian, says bad debt is a "significant market issue" and all lenders are keen to minimise risk and preserve the quality of their credit portfolios.
Research released last week by accountancy firm KPMG found that banks wrote off a record £1.4bn of consumers' bad debts last in 2006 and around 45,000 people used an IVA to extinguish their debts - twice as many as in 2005. An IVA enables debtors to rewrite their debts while avoiding the penalties associated with personal bankruptcy. A separate study by Grant Thornton has forecast around 30,000 personal insolvencies in the first three months of 2007.