Based on the 2007 Independent Review of the Banking Codes and, following the recommendations of the Independent Reviewer & Response by their Code of Sponsors, there are a number of new revisions that place the onus on the lender to demonstrate 'treat customers fairly' principles.

As consumer debt rises financial institutions are experiencing more defaulting customers and subsequently suffer from falling profitability, rising costs of bad debt and, more importantly, bad customer experiences when collections are requested.

Lenders now need to identify, as early as possible, those customers showing signs of stressed financial behaviour, before they start to default. Using this approach, potential delinquency can be discovered, sensitively managed and monitored.

Aimed primarily at financial services and integrating with existing systems; Portrait Pre-Delinquency Management combines sophisticated predictive analytics and process management to improve the efficiency and effectiveness of the debt management lifecycle by identifying potential delinquents earlier in the cycle, whilst applying fair treatment strategies.

According to Nick Randall, Portrait Software's CEO, the spiral of bad debts has had a dramatic impact on banking practices.

"Not only have financial institutions increased their provisions for bad and doubtful debts, most have adopted a much more stringent lending policy which, in turn, leads to lost opportunities. Coupled with the new Banking Code recommendations lenders clearly need to review their systems and processes" he said.

The Banking Code revisions, which became effective in March 2008, also state that:

institutions need to contact such customers to emphasise that, if they are in difficulties, a 'sympathetic and positive' approach will be taken and to provide details of independent free money advice agencies.

In such cases they should suspend automatic offers of credit limit increases and weed out such people from credit marketing lists.

The customer approach, through dialogue and sensitive conversations, needs to be handled with skill and experience in order to generate the best customer reaction possible. During the interaction Portrait Pre-Delinquency Management prompts the advisor to focus on the diagnosis of key behavioural indicators, derived from predictive analysis, in order to determine the customer's circumstances. With behavioural analytics and insight into the customer circumstances, Portrait Pre-Delinquency Management then invokes appropriate treatment strategies real-time. These could include the automatic generation of a letter, or a telephone call, to offer help such as changing credit limits, suggesting a new payment schedule or providing details of independent, free advice agencies.

By also addressing additional problems such as raising credit card limits and targeting inappropriate offers to customers who are struggling financially, banks are able to demonstrate corporate social responsibility and adherence to the new Banking Code revisions.

Key benefits
Portrait Pre-Delinquency Management is designed to:

Enable Treat Customers Fairly principles

Significantly reduce the provision for impairment

Reduce the number of accounts moving into collections

Identify new revenue opportunities

Maintain revenue by keeping profitable accounts alive

Drive up customer lifetime values

Demonstrate sensitivity and offer advice when most needed