Denied Not: Customers Get 2nd Chance Checking! Now How Do You Decide When to Offer Them?
CNN ran an article titled “Denied a bank account? You have options” which talks about how customers are denied regular checking accounts may receive second chance checking accounts from some of the leading banks in the US. According to industry data, around 20% of customers are denied regular checking accounts and 15% of bank account applicants denied regular accounts are instead offered “second chance” checking accounts or prepaid cards. The article points out that these second chance accounts have larger fees and are priced more like loan products – priced for higher risk with many restrictions. Some of them even come with a money management course that the customer has to go through before getting the second chance checking account.
A prior article in this blog pointed out the opportunities of the segment of the market that qualifies for these alternate checking accounts. Banks are executing on that opportunity. As more and more banks start offering these products, the types of second chance checking accounts and prepaid cards offered as options by each bank are increasing. This has huge implications from a policies perspective. The policies get complicated and have to address questions such as:
- Who do you offer free checking to?
- If they do not qualify, when do you offer fee based products, and which one?
- What restrictions are appropriate for this particular customer?
The risk policies need new data because the population where these decisions have to be made are considered thin-file or no-file based on traditional definitions of credit data. The risk policies need to be supported by a robust decisioning platform that can support these complicated policies and respond in sub-seconds at high volumes.
Banks are implementing these today. If you want to learn more reach out to your Equifax representative or send us an e-mail
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