Britannia Building Society, the leading mutual, is utilising an advanced risk management solution from Experian, the global information solutions company, to give greater insight into its existing mortgage customers.
In total, Britannia Building Society, including its intermediary lender Platform, serves more than 300,000 mortgage customers in the UK.
The solution, Delphi for Customer Management, provides a regularly updated risk assessment of existing customers and is already producing extensive benefits for Britannia Building Society, particularly by reducing mortgage arrears. In fact, its use has helped the building society to reduce customer mortgage arrears by 50 per cent against a backdrop of rising mortgage arrears experienced by the mortgage industry as a whole.
According to the latest figures from the Council of Mortgage Lenders, mortgages in arrears of 3-6 months at the end of 2005 rose to 59,700 – up three per cent compared with the end of the first half of 2005, and up 11 per cent on the end of 2004. The number of 6-12 month arrears cases rose to 32,470 – three per cent higher than in the first half of the year, and 21per cent higher than at the end of 2004.
Manjit Hayre, Credit Risk Manager, Britannia Building Society, said: "Traditionally, the lack of behavioural data within the mortgage arena has hampered the customer management and decision making process. For example, if people are struggling financially, they will still try and keep up with their mortgage payments. As a result, mortgage providers were often the last to see worsening payment patterns – internal mortgage data only tended to tell you whether payments are made and are on time.
"With Experian's Delphi for Customer Management, we are able to access information, including shared data from other organisations, to get the full picture of our customers' wider credit commitments and affordability. This ensures that we make the most accurate decisions to control bad debt and that we communicate with and manage our customers in the most appropriate way; strategies are put in place to minimise risk and to ensure that the lending burden is not increased with the offer of additional borrowing.
"The Experian solution is also helping us to meet our requirements with regards to Basel II. In fact, Basel II was a major driver for our choice as Delphi for Customer Management provides us with a much wider view of customers and their credit behaviour, including the likelihood of default."
Jill Gratton-Fisher, Sales Director in Experian's Consumer Business, added: "Britannia Building Society has been an Experian client for over 12 years and this latest contract builds on our existing partnership, delivering significant benefits and advantages to the Society, including the introduction of the Consumer Indebtedness Index (CII) into its business processes. CII provides extra predictive power as part of the Delphi for Customer Management solution to enable Britannia Building Society to meet its responsible lending obligations by giving it the means to identify individuals who are able to fulfil their current repayments but will struggle to keep up their level of commitment if it was to increase.
"Delphi for Customer Management is regularly updated to ensure that significant events such as changes of address, sudden increases in credit activity, registration of new judgments and missed payments are registered and acted upon so that the customer is re-scored using the latest information. This information helps Britannia Building Society to be proactive and take the necessary action with regards to customer retention and collections."