Our news and views relating to Data Analytics, Big Data, Machine Learning, and the world of Credit.
As developed countries experience a slow but steady recovery, credit risk managers in emerging markets face growing default rates as household debt continues to rise with little relief in sight. The Institute of International Finance stated at the end of 2015 that global household debt had risen by $7.7 trillion since 2007 to more than $44 trillion, and that $6.2 trillion of that rise was in emerging markets. Household debt per adult in emerging economies also rose by 120 percent over that period to some $3000, it added.
As the banking industry pursues improved customer engagement, unlocking the value of data becomes critical in designing a successful loyalty programme. The balance of power in banking has changed. What customers expect, how they want to be serviced, what information they are prepared to share, and how loyal they are prepared to be, have all changed radically. According to leading industry analysts, Forrester Research, we are in the age of the customer, in which the only sustainable competitive advantage is knowledge of and engagement with customers.
If you at all follow the on-goings of Hollywood, you’ve probably heard of a baseball movie starring Brad Pitt that came out a few years ago. Its name is Moneyball, and it relates an important lesson that is revolutionising customer loyalty strategies. The movie tells the true story of Billy Beane, general manager of baseball team the Oakland Athletics, who’s sick and tired of their lacklustre performance. After a key loss to the New York Yankees, he’s forced to rebuild the team on a limited budget. Instead of going with the obvious picks, he enlists the help of a Yale economics graduate to crunch the numbers and pick a team of statistically strong yet undervalued players. After a few losses, the data-driven approach is proven effective when the Athletics go on to have a 20 game winning streak – the longest in the history of the game.
According to the World Bank, South Africans are the biggest borrowers in the world, with 86% of the population in debt.* And unfortunately, the National Credit Regulator, goes on to state that of the 20 million credit-active consumers in South Africa, 47% are in arrears on their accounts by three months or more, or had judgements against them, or had negative credit ratings on their credit record. ** As a credit risk professional, it is imperative to be able to segment your debtors by their propensity to roll and then apply the appropriate treatment by segment to minimise this risk and increase lift in your debt collection strategies.
South Africa’s First National Bank (FNB) has been considered one of the world’s most innovative financial institutions for years now. Voted the most innovative bank globally in 2012, the financial institution owns bragging rights as the first bank in South Africa to launch a mobile banking app in 2011 and second in line to provide fully-fledged web banking portal conveniences to its customers. For those who can remember the days before feature-rich banking apps, FNB also carved in-roads to making basic online services available to customers through SMS and WAP services - on what is now considered the archaic cell phones and internet backbones of the early 2000s.