Santander use Callcredit’s Over Indebtedness Score to improve risk strategy
Santander Cards have successfully integrated Callcredit Information Group's Over Indebtedness Score into their current risk strategy to improve their understanding of existing customer indebtedness and their ability to repay balances.
The Over Indebtedness Score (OI)offers a quick, convenient and cost effective way to assess how both new and existing customers are managing their finances by validating an individual's income against the utilisation of available credit, which in turn provides an assessment of their ability to repay their outstanding debt.
Unlike other solutions available in the market place, Callcredit's OI score is well established within the banking sector, offering unrivalled insight, as a result Santander has implemented the OI score across their cards portfolio to drive improved risk strategies based on affordability capacity as well as traditional risk methodology. The OI Scoreworks by identifying those customers who may not be showing traditional signs of financial difficulties such as missing repayments, early arrears or using savings or alternate credit facilities to service outstanding debts. Analysis of the Santander credit card portfolio has identified that 4% of active accounts would be expected to contribute 35% of future delinquent balances, with over half of these accounts not identified as high risk using existing behavioural scores.
Similar results has been observed from retrospective analysis across other Santander product portfolios, with 44% and 47% of personal loan and mortgage delinquencies being identified from the 12% and 8% most highly indebted customer accounts an indicated by the OI score.
The use of the OI Scorealso supports the demonstration of compliance with affordability regulations such as the OFT's Irresponsible Lending Guidelines and the Consumer Credit Directive for existing customer management.
Nigel Sparrow, Unsecured Credit Director at Santander said "The work we've been able to undertake with Callcredit has enhanced understanding of our existing Santander customer portfolios with an increased insight into customer affordability and indebtedness. The results of retrospective analysis across retail product portfolios has been uniformly positive, enabling enhanced credit management strategies to be developed in line with our desired portfolio management objectives and to ensure appropriate customer outcomes"
Kaye Rickards, Strategic Account Director at Callcredit Information Group said "The OI Score is a reputable service, as shown by our client base. It provides valuable insight for lenders in how customer's are managing their finances and ensures that Santander are able to identify those accounts which are likely to fall into default in the future, even though they may not be showing traditional signs of falling into difficulties. As a result Santander have then been able to put suitable strategies in place for these accounts to ensure that they are following responsible lending guidelines and not providing additional credit to those customers who may already be financially over-stretched"