3 Cross Selling Mistakes and How to Avoid Them

3 Cross Selling Mistakes and How to Avoid Them

Cross Selling Oh, everyone talks about it. Cross selling. It will save the bank. We all know the statistics. Based on several different sources, we know that any given bank holds about 2 – 3 financial products per household where there could be up to 10 possible accounts. I spend a good deal of time talking about the appropriate use of cross selling in my book, Seven Billion Banks. Despite cross selling being a major priority for banks over the last few years, we’re just not that good at it. Consider the typical example: The Phone Call Jill has her checking account with her primary bank. It’s the only account she has there, although she has credit cards, an auto loan, and a mortgage with other institutions. She has three different credit cards, one that she just opened last week to start earning miles. They all have high limits and no balances, making her credit score quite high. But her auto loan is about 3 years old – about the time when people think about trading the car in or refinancing. Jill gets a call from her bank. It’s an account executive at the branch cross selling. He tells Jill that they’re really happy she’s been such a good customer for so long and would like to schedule an appointment for Jill to come into the bank and review her bank relationship. Jill doesn’t really know what that means – but it sounds ominous. She’s never met this “account executive” before; it wasn’t the person she opened her account with. She’s quite busy and declines. Undaunted, the banker continues...
Credit Card Fraud Analytics: The “Obama Problem”

Credit Card Fraud Analytics: The “Obama Problem”

“Excuse me, sir….” You know the situation. It’s probably happened to you. You’re traveling. Or out to dinner with clients. Or buying a special gift. And suddenly, you’re stuck with that shopkeeper or waitress staring at you saying the words you dread to hear: “Your card has been declined.” There’s nothing wrong with your card. You have available limit. Your payment wasn’t late. You’re the victim of poor credit card fraud analytics. Your transaction was flagged by the bank as being “suspicious” and your card was shut off. Now, it’s your responsibility to turn it back on. If you’re lucky, your bank may contact you in advance of shutting it off. Or maybe they’ll reach out to you in the moment. But no matter how it goes, it’s now your problem. Well, it was President Obama’s recently as well, as he admitted at a meeting of the Consumer Financial Protection Bureau (CFPB) recently. While dining out at a nice restaurant, his card was declined by his issuer (Chase Bank, as far as the news reports go). He was saved by his wife’s card, which did work. Which goes to show you how random and problematic these analytics can be. No One Wants Fraud Just so it’s clear: no one wants fraudsters to get away with anything. But the fraudsters seem to have moved from the random target to the “big prize” of hacking into an entire organization. That completely changes the dynamic of how we detect fraudulent activity on a card. Instead of looking for an “out of the blue” odd transaction, we’re invalidating thousands (or in the case...
What Makes “Best” in Next Best Offer?

What Makes “Best” in Next Best Offer?

We Need Better Marketing Banks today are looking to drive significant improvement in their marketing efforts by using real-time analytics. And among the latest efforts, there’s a lot of talk – and promise – about Next Best Offer. No one really agrees on what Next Best Offer means. It wouldn’t be the first time we all use terms we don’t really know what they mean (uh…big data, maybe?) But I want to clarify what Next Best Offer should mean. Or at least tell you what it shouldn’t mean. When I say Next Best Offer, I mean the offer that adds the most value to the customer – as measured by an increase in their overall expected customer lifetime value. Expected customer lifetime value is made up of two parts: The profitability if they accept the offer, multiplied by The probability they accept the offer. Most Next Best Offer engines only offer you the second part: the probability. They have models that tell you which kinds of customers should get which product. But they don’t speak to the individual profitability of the customer. Three Phony Next Best Offer Solutions I want to talk about three solutions that often get called Next Best Offer that aren’t. If you have one of these, they’re not bad; but they’re not Next Best Offer either. They can be improved. The Demographic Segment Solution There are many vendors who have taken marketing data – both demographic and psychographic – and created customer segments in retail banking. They can take a individual customer and map them to these segments. Once they’ve mapped a customer, they have chosen...
Keep Payday Lending Safe, Legal, and Rare

Keep Payday Lending Safe, Legal, and Rare

Nothing seems to get bankers, consumer advocates, and government regulators so riled up as payday lending. The short-term non-bank loans taken out by millions of consumers a year are the focus of government studies and consumer reporting. But clearly, there’s a demand, and if we are creating personalized banking experiences for each and every consumer, there must be room here somewhere. It’s easy to dismiss this financial vehicle as predatory and harmful, but it opens up the question: what should these borrowers do? When you start to look at the data, you find that the story isn’t so simple and the pejoratives used to describe the industry and its customers don’t quite fit. I’ve completed an initial analysis on the data reported by the Consumer Financial Protection Bureau (CFPB) in the United States and have drawn some conclusions about the behavior of the typical payday loan borrower. From those conclusions, we see what these borrowers need and we have an glimpse into how to provide it. Keep Payday Lending Safe It’s clear there’s a need for short-term borrowing – either as an emergency funding source or because of poor cash-flow management practices. The trick is to provide for short-term financing without trapping consumers in a never-ending downward predatory spiral. The way to do that is to finally admit to ourselves one simple truth: these are not short-term loans. At least not the 14-day or 30-day ones that people think they are. Data collected and reported by the CFPB in their report, CFPB Data Point: Payday Lending, shows that the typical payday loan borrower “rolls over” their loan multiple times...