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©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Discovering new customer insights from trended data Extracting new value from existing data Mason Carpenter Senior Director | Experian Data Labs ©2014 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Confidential. Innovating with existing Experian data Two key paths for acquiring new consumer insights ► ► Acquiring new data Gathering new insights from existing data Looking at customer and tradeline data in different ways can reveal new insights ► ► Examining changes in customer behavior and data over time Examining interrelationships between tradelines over time Case Studies for new uses of Experian data ► ► Identifying Balance Transfer activity for model development Understanding the drivers of Home Equity Line of Credit (HELOC) account closures by examining other tradeline activity 3 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Identifying balance transfers Tradeline 1 Logic searches for pairing of spend and payment activity between tradelines ► Identifies one-to-one and manyto-one money movements Material change in spend, payment, and / or balance activity required ► Additional rules regarding balance behavior following balance transfer event applied Experian data leveraged Trades linked month-to-month to capture variations in tradeline attributes Both reported and inferred spend and payment data used Payment Spend Month 1 Month 2 Tradeline 2 Balance Payment Spend $6,000 Balance $1,000 $200 $6,100 $100 Month 3 $100 $6,100 $1,200 $2,200 $300 $6,200 $200 $200 Month 4 $100 $1,000 $1,100 $200 $1,000 $6,000 Month 5 $100 $800 $1,800 $1,000 $500 $5,500 Month 6 $100 $500 $2,200 $100 $300 $5,700 $5,200 Balance transfer event Payment and spend data enable visibility to balance transfer ► Tradeline 1 payment of $6,100 ► Tradeline 2 spend of $6,200 Minimum of six months raw tradeline data required 4 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Insight in to balance transfer landscape 60.0% Balance transfer landscape – sample of banks Bubble size represents total 2011 customers BT $B Citibank Estimated annual card-to• $23.7B in total BT activity card consumer balance • 36.6% of BT activity captured by transfer activity: Bank A $35-40B • 8.5% of Bank A customers had BT activity in the year < $1B % of Customer Bal Xfer $ Captured by Bank 50.0% 40.0% $10B+ $10B+ 30.0% $10B+ $1-10B < $1B $1-10B $1-10B $10B+ 20.0% $1-10B <$1B $1-10B $10B+ $1-10B <$1B 10.0% 0.0% 4.0% < $1B < $1B 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% % of Bank Customers who Bal Xfer'd in 2011 11.0% Capital One • $11.6B in total BT activity • 15.6% of BT activity captured by Bank B • 5.0% of Bank B customers had BT activity13.0% in the year 12.0% 5 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Predicting future balance transfer activity Balance transfer propensity model performance By % of consumers reviewed Bal Xfer Propensity Model Performance By % of Consumers Reviewed 90.0% 80.0% % of Bal Xfers Identified 70.0% 60.0% 50.0% % of Consumers w/ Bal Xfer % of Bal Xfer $ 40.0% 30.0% Highest scoring 3% of population 31% of BT customers captured 40% of BT $ captured 20.0% 10.0% 20.0% 19.0% 18.0% 17.0% 16.0% 15.0% 14.0% 13.0% 12.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% % of Consumers Reviewed (high score downward) 6 6 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Understanding the drivers of HELOC closure There are a number of factors that might drive a consumer to close a HELOC account ► Shopping for better interest rate / terms ► Refinancing of mortgage ► Moving to a new home ► No longer need the line of credit Identifying the key driver(s) is key as it heavily impacts the strategy you might use to retain the customer 7 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Identifying mortgage-change driven HELOC closes Tradeline and other customer data helps reveal key attrition drivers HELOC close event New account data Inquiry data Mortgage ► Mortgage HELOC Other Refinance driven 18% of closes $ amount relative to prior mortgage HELOC Move driven 17% of closes Customer data Change of address Rate / terms driven 8% of closes 8 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Understanding the drivers of HELOC closures Tracking changes in debt usage around the time of the HELOC close also provides insight in to potential retention motivators Average Balance changes 6-8 months after HELOC close (all tradelines): HELOC Revolving Debt* Bankcard Mortgage All Debt HELOC Closers 86% 78% 14% 5% 10% HELOC Non-closers 1.5% 1.4% 0.5% 1.1% 2.4% Only 8% of BAC HELOC closers subsequently opened a new HELOC Sharply reduced use of debt indicates interest rate reductions may be of limited value as a general HELOC retention strategy 9 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Conclusion More complicated consumer behaviors and additional consumer insights can be inferred from simple tradeline data Studying changes in behavior and / or interactions in tradelines over time is key to identifying new insights Client data can be leveraged to strengthen and verify inferences where available 10 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Some parting thoughts – challenges What other key consumer insights can we infer from Experian data? ► Examples: ● Trending ConsumerViewSM data to gain insights about a neighborhood ● Using trended tradeline data to measure customer loyalty ● Separating high risk / sloppy payers in early delinquency using trended data Are there additional opportunities to test / validate inferred behavior predictions with client data? 11 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. #FOIC2014 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential. Mason Carpenter Senior Director, Experian Data Labs Experian e: [email protected] t: (804) 370-2797 m: (804) 370-2797 ©2014 Experian Information Solutions, Inc. All rights reserved. Experian Confidential.