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Weathering the Storm | Harnessing data – meaningful action, valuable results

By Kris Frantzen 27 Sep 2017

North America has felt the unfortunate wrath of Mother Nature over the past month, and our hearts and prayers go out to all of those impacted by the recent disasters. Beyond the devastation to personal and family lives, there will be significant economic impact felt from Main Street to Wall Street. Whether directly impacted by the recent events or not, though, many financial institutions face an impending challenge of increased loan delinquency rates. Abby Progin, Temenos' Product Evangelism Team Lead, presents a blog detailing the risks - and, more importantly, key steps financial institutions can take to prepare themselves to "weather the storm". 

Following that piece, we'll share a blog and case study from Kris Frantzen, the VP of Product Strategy and Evangelism for the Lifecycle Management Suite. Financial institutions armed with the right systems and processes can apply relatively simple solutions to recognize significant benefit - for staff efficiency and common-sense, personalized account holder relations.  You'll see how one customer has put data analytics to practical, meaningful use.

Finally, we'll turn our attention to re-building and moving forward - just as so many people and business have - in the wake of the storms. Temenos is proud of the part we play in providing solutions to Credit Unions and Banks, recognizing those financial institutions play such a significant role in the development of their communities and account holder bases. Product Evangelist Kevin Barth will conclude our blog series with a focus on how financial institutions can best position themselves to provide a helping hand to individuals looking to grow or re-build.



Financial institutions find themselves in an incredibly challenging market. More than ever before, they are faced with growing consumer expectations, new and varied competition, and the burden of regulatory requirements. Collections is a particularly challenging area for credit unions and banks, having to manage the account holder relationship through the "tough" times, not just the good.


Unfortunately, market indicators point to a probability of more of those tough times on the horizon.  Delinquency rates, at near historical lows, face pressure from a number of factors, especially in the auto lending space. The number of auto loans outstanding have increased by over 20% during the past two years – driven significantly by loans classified as subprime or “deep subprime”.  32% of all outstanding auto asset-backed securities issued in 2016 were “deep subprime”, up from just 5% in 2010. This has led to a steady growth of auto lending to a record $1.1 trillion at the end of 2016 but also portends increased debt collections activity in the near future.


The charge of meeting these challenges and remaining competitively efficient has sent leaders of banks and credit unions in search of ideas to differentiate themselves. For many, that has meant making better use of their account holder data through analytics. What insured institutions are finding is that their competitive advantage against disruptors, or even other financial institutions, lies in the history of their relationship with the account holder, both in the security that they have been able to provide, but also in all of the information they have been able to gather.


Effectively mining that vast amount of data can provide a financial institution with valuable insight into its account holder relationships. With collections activity, this insight can reveal the appropriate accounts on which to focus, and how and when to address them. Of course, as Thomas Edison said, "The value of an idea lies in the using of it." The meaningful, practical application of data analytics is the key to meeting the challenges faced by banks and credit unions.


So what does data analytics making a real impact on its business look like? Let’s look to Johnson Bank, based in Racine, Wisconsin. The team at the $4 billion bank has developed a predictive account holder scoring model based off of historical account holder data to drive the activity of its collectors using the Temenos Lifecycle Management Suite Collections module.


The benefits of their approach are twofold:

  1. The program allows for the focused efforts of their collections team across a large portfolio of loans. The intelligent and automated use of data ensures the right information is presented to the right staff and the right time. Relying on traditional means, including data points (such as credit score) to segment and prioritize accounts does not provide the efficiency required to keep up with the growing demand.
  2. The account holder experience also benefits from this approach. The queueing of accounts based on the risk score offers a personalized collections strategy for each account holder. The bank's use of recent payment history average ensures delinquent accounts are being worked in line with current conditions. Account holders aren't being unnecessarily targeted based on outdated assumptions.


As we move forward, the limitations of older collections processes and system employed by many banks and credit unions are sure to be exposed. Financial institutions with considerable lending portfolios (especially those with significant auto lending exposure) would be wise to follow a similar path to Johnson Bank, and look to data to find ideas for improvement in their collections activities and strategy. Most importantly, they must also take the steps of putting into practice those ideas in order to achieve meaningful results.


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