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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
j.mp/millbanking
6 Critical Needs For
Retail Banking In A Millennial
World
Joshua Schnoll
Senior Director
FICO
Kevin Poole
Director
FICO
© 2015 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
Retail Banking in a Millennial World
Joshua Schnoll is Senior Director of Product Marketing for FICO. He focuses on
FICO’s customer lifecycle products (Originations and Customer Management),
Marketing Automation, and Mobile Solutions across the financial services, retail and
healthcare industries. Previous to joining FICO in 2013, he worked at Microsoft and
Sun Microsystems. Joshua holds a B.A. from Pomona College and an MBA from
UCLA. You can connect with Joshua on Linkedin.
Kevin Poole is Director at FICO within their Pre-Sales Origination Practice. Kevin
has been with FICO for over 15 years where he has been focused on FICO’s
Origination solutions. He has worked across many geographies and aspects of
Originations. This includes Implementation of FICO’s Solutions to large financial
institutions to his current position in Pre-Sales Consulting.
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
Huge Demographic Wave
More Millennials than Baby Boomers
Largest population cohort* in US history
76M
56M
Boomers
Boomers
79M
78M
Millennials
Millennials
2011
2030
*US Census Bureau, 2012
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© 2015 Fair Isaac Corporation. Confidential.
Millennials Were Born Into "The Customer Economy"
As used by The Economist, Salesforce.com, Businessweek, Fast Company…
CUSTOMERS
4
COMPANIES
Empowered with information
Engaging customers
as individuals
Increased expectations
Applying technology to
multi-channel interactions
Fewer barriers to change
Connecting customers,
employees and products
© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
Use Customer Knowledge To Serve Their Needs
Demographics
Purchase
History
Price
Sensitivity
5
Needs
Prediction
Customer
Preferences
© 2015 Fair Isaac Corporation. Confidential.
j.mp/millbanking
Understanding And Serving Millennials
6 Critical Behaviors And Strategies
© 2015 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
© 2015 Fair Isaac Corporation. Confidential.
3
6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
1) Millennials are More Likely To Switch Banks
Millennials
5X
3X
More likely to close all
accounts with primary bank
More likely to open a new account
with another bank
*Comparison of 25–34 to 50+ age demographics.
Q: Thinking about your plans for banking for the next 12 months, how likely is it that you will….?
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© 2015 Fair Isaac Corporation. Confidential.
Customer Treatment Requirements
►Use
analytics and multiple data sources to drive offers
total customer value into offer management
►Personalize interactions to foster relationship
management
►Incorporate
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
Customer Examples
Target and Cross-Sell
Small Lender uses predictive models to enable real-time offers of credit
and cross-sell loan products
► Accelerated
► Improved
application review process by 15%
risk profile of approved accounts without reducing approval rates
Major Canadian Bank integrates data and decision logic between
originations
and account management
► Automates
or routes credit request fulfillment across channels
consistent customer management across credit products
► Increased new unsecured credit volume by 60% in less than one year
► Creates
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© 2015 Fair Isaac Corporation. Confidential.
2) Perception of High Fees #1 Reason for Leaving
Why Millennials Leave Banks
34%
27%
24%
Account fees too high
Negative experience
with a representative
of the bank
There were too few
ATM locations
Q15A: Thinking about when you switched your primary checking account in the past, which of the following reasons were factors in motivating you to leave your former bank
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
5
6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
Video - Fees
https://www.youtube.com/watch?v=7fVqqgeLNGE
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© 2015 Fair Isaac Corporation. Confidential.
Customer Example
Customer Management Across Accounts
► Client
challenge
Reduce human judgment based pay/no-pay decisions on overdrafts
► Solution
FICO TRIAD Customer Manager
►
Automated risk management of over-limit behavior
►
Based fee waiver decisions on risk vs. profit criteria
► Value
►
►
►
►
12
Improved customer service and fee income
Overdraft pay rates went from under 50% to 75%
More accurately targeted fee waivers to appropriate customers
Made overdraft pay decisions and strategies auditable and reportable
© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
3) Millennials Are Likely To Hold Multiple Products at Primary Bank
Average Number of Products/Services by Age
Any Bank
Primary bank
7
6
6.38
6.25
6.00
5.98
5
4.60
4
3
3.44
3.64
3.37
3.55
3.31
2
1
0
Total
18-24
25-34
35-49
50+
Q5: Please indicate which of the following banking and financial products/services you currently use. Q8: You indicated you currently have the following type(s) of product(s)/service(s). For each one, please
indicate which product(s)/service(s) you have with [PRIMARY BANK] (vs. another institution).
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© 2015 Fair Isaac Corporation. Confidential.
Customer Treatment Requirements
►Balance
►Provide
overall risk/value of portfolio and relationship
consistent, unbiased decision criteria to agents &
systems
►Personalize
responses to incorporate customer
information
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
7
6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
Customer Example:
Customer Management Across Accounts
► Client
challenge
Get a full view and understanding of the complete customer relationship
to make genuinely personalized treatment.
► Solution
A relationship based credit line management & collections strategy
powered by FICO TRIAD Customer Manager
► Value
Achieved projected ROI in less than 12 months
Automated credit line management reduced open-to-buy ratio 5%,
translating into millions of dollars in fewer charge-offs
Estimated 20% savings in early stage collections, handling in-house
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© 2015 Fair Isaac Corporation. Confidential.
Polling Question
How do Millennials prefer to get push notifications (bill payment reminders,
suspicious charge, etc.)?
A.
B.
C.
D.
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E-mail
Text (SMS)
Mobile App Notification
Phone Call
© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
4) E-mail Is Still the Most Preferred Channel
18-24
25-34
35-49
50+
100%
18–34 year olds still prefer e-mail for:
►Automated
balance updates,
Reminders,
►Late Payment Reminders
►Credit Limit Warnings or
►Suspicious Charge Notifications
80%
►Bill Payment
60%
40%
34 33
31
21
20%
9
5
7
5
7
7
21 19
18
9
4
4
3
13
6
2
4
3
2
1
0%
Mail
Phone
E-mail
Text message
Mobile App
In a branch
Q18B: For each of the following types of information you might receive from [PRIMARY BANK], what would be your preferred way of receiving each type of information? Note: Showing % preferred channel for
at least 3 of the 5 types of information listed. Information types: Automated account balance update, Bill payment reminder, Late payment reminder, Credit limit warning, Notification of suspicious charges
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© 2015 Fair Isaac Corporation. Confidential.
Video - Notifications
https://www.youtube.com/watch?v=S57eSolNaWE
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
5) They Want More Notifications Via Text Message
Typical
Preferred
100%
Gaps across communication types indicate an
opportunity for banks to deliver this type of
information via text to better satisfy consumers
80%
60%
40%
20%
8
11
8
12
7
12
8
14
20
13
0%
Automated
Account Balance
Update
Bill Payment
Reminder
Late Payment
Reminder
Credit Limit
Warning
Notification of
Suspicious
Charges
Q17: For each of the following account activities with [PRIMARY BANK], A) How do you typically conduct each activity? B) What would be your preferred way of conducting each activity? Q18: For each of
the following types of information you might receive from [PRIMARY BANK], A) How do you typically receive each of the following types of information? B) What would be your preferred way of receiving each
type of information?
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© 2015 Fair Isaac Corporation. Confidential.
Customer Example
FICO® Customer Communication Services
►
Client challenge
Decisioning
Relationship
Savings
► Increase
conversion rate of loan
applications through proactive contact with
non or late responders
► Reduce letters & calls associated with
applications not progressing
►
Solution
► FICO®
►
Customer Communication Services
Value
► Over
45% engagement with applicants who had failed to return
their documents within the expected time
► Over 25% interactions completed without need for advisor
► 20% of applications released as not progressing
► Advisors freed up to work with 35% of responders seeking to progress their loan application
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
6) Millennials In Fact - Do Have Credit Cards
Millennials
88%
Debit Card
85%
Debit Card
58%
Credit
Card
85%
Credit
Card
18–24 Year Olds
25–34 Year Olds
Q5: Please indicate which of the following banking and financial products/services you currently use.
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© 2015 Fair Isaac Corporation. Confidential.
Credit Cards Are Atop the Millennials New Account Priorities
Types of Accounts Considering Opening
Everyday
Banking
Savings
Home, Auto, Life
Retirement, Investment
60%
18-24
50
50%
45
39
40%
31
30%
25-34
50
31
33
33
29
28
31
29
26
25
20%
25
24
17
14
19
24
19
17
15
10
15
11
11
11
10%
0%
Q14B: What type(s) of account(s) are you considering opening?
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
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6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
Customer Example
Bank Card Growth
► Client
challenge
Super-Regional bank with small credit card portfolio wanted to
aggressively grow their card business without increasing their
risk profile
► Solution
FICO’s Bank Growth Solution: innovative, integrated marketing
and underwriting platform powered by continuous learning
analytic hub.
► Value
Increase acquisition volume 3-fold in first 12 months
Increased cross-sell penetration 15%
Average balance per account up 8%
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© 2015 Fair Isaac Corporation. Confidential.
Don't Forget "Soft-Benefit" ROI
► Social Image
► Perception that bank recognizes and values their loyalty and longevity
► Competitive Differentiation
► Improves desirability of bank as primary relationship
► Complaint
Reduction/Satisfaction
ROI
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© 2015 Fair Isaac Corporation. Confidential.
© 2015 Fair Isaac Corporation. Confidential.
12
6 Critical Needs For
Retail Banking In A Millennial World
CBA
April 29, 2015
Contact Us For Help
Proven solutions
►
►
►
►
►
25
25
Analytics, Scoring, Modeling
Business Rules Management
Origination, Debt, Fraud, Marketing
Multi-channel communications
Speech and text analytics
Current state assessment and
recommendations
►
►
►
►
Strategies
Optimization
Modeling
Business rules
©
© 2015
2015 Fair
Fair Isaac
Isaac Corporation.
Corporation. Confidential.
Confidential.
j.mp/millbanking
Thank You &
Questions
Phone: 888-342-6336
Email: [email protected]
Website: www.fico.com
© 2015 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
© 2015 Fair Isaac Corporation. Confidential.
13