Augment Systems to get Quicker ROI
In this space, we have written about how some banks are making changes to simplify their technology and reduce operational complexity. Replacing old, antiquated systems with new, more flexible solutions is a great option and can help deliver significant improvements in risk, operations, IT, and lending.
Alternatively, some of our banking clients tell us they also are looking to augment their existing infrastructure to gain benefits in the short term while they evaluate these longer-term strategic alternatives. In this case, the banks need to make quick, incremental improvements to their data integration layer to deliver previously unavailable information.
One particular bank we worked with wanted to grow their credit card business by addressing challenges with accounts that they could not automate decisions on. Many of these accounts had little or no traditional credit history. Additionally, for those accounts being opened, they wanted to improve profitability and retention concerns by addressing pricing. To help meet these objectives, the bank looked at various alternative data sources and conducted the analytical due diligence process to meet their growth, profitability, and retention goals.
At the end of this analysis the bank identified that one particular non-credit data source could help them provide the improvements they were after. As a result, they started the process to add evaluating the new information on the majority of their credit card applications.
The bank turned to their IT organization to determine how to quickly and efficiently add this new data to their process. They faced significant obstacles.
- The bank’s existing data integration technology did not support the data source needed
- The cost to modify their existing solution reduced the ROI and overall benefits
- The time required to modify their existing solution further reduced the expected benefits
- Regulatory changes were consuming most IT capacity
- Decisioning technology can not readily consume the new technology
Equifax worked with the bank to provide a simple solution to enable integration to the new information and resulting policy changes. The solution allows the bank to integrate to the new information in a manner that keeps the existing data integration solution in place. The new information is formatted and delivered in a manner that is already enabled for consumption within their existing decisioning technology.
The resulting solution overcame the obstacles stated previously, and the bank is unencumbered to grow their business by increasing the decisionable universe while making better risk decisions on their entire population. As an added benefit, no new technology had to be installed at the bank, and data security challenges were minimized due to the existing relationship with Equifax. The solution is estimated to accelerate the adoption of the new information between 9 and 12 months, and help save $250k+ of capital versus modifying their legacy platforms.
Many banks can take advantage of this augmentation approach to achieve their short-term objectives, while evaluating longer-term, strategic direction for their technology platforms.
Want to learn more? Send us an e-mail.
This post was contributed by: Lee Grice.
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