Credit Risk Experts

How to Halt Customer Leakage in its Tracks

By Martin Hagerty, Chairman Castlight Financial

Martin Hagerty has over 30 years’ experience in the credit risk industry across some of the world’s major blue chip organisations, most recently as Chief Risk Officer at HSBC for the retail bank in Latin America.

If we took no measures to insulate our homes, each day 25% of the heat produced by our boilers would escape through the roof, up to 35% through the walls while 10% would fly out the windows.

So of course, we do something about it. We try to make sure our hard-earned money isn’t heating the street.

It’s just the same in the credit risk industry. As you’ll know if you’re reading this, every day credit risk experts are challenged with leakage. Hard earned business, potential customers who want to do business with us, leaking out through the system. The Castlight team know this because we’ve been there, worked in the industry and have quite literally felt the pain.

A Frustrating Journey

Mostly, customers leak out the process because they are frustrated by the customer journey. It all feels too much like the M6 on a bank holiday Monday.

They’re ground down by the system. They can’t find the required bank statements and have to send off and pay for replacements. They’ve just changed job and haven’t got the right payslips. They’ve recently moved house and need the paperwork to prove it. And then all the documentation has to be parcelled up and sent off. There’s a long queue at the post office and the customer starts worrying that their address details and all their bank account information is in that envelope. What if its intercepted?

Even if the customer has got this far, the pressure has been building up. In far too many cases, the system springs a leak. The customer thinks, why don’t I just see if the Bank of Mum and Dad is still open for business. Or maybe there’s another bank that’s going to be less hassle.

My estimate is that we are leaking as much as 20% of new business because credit risk professionals haven’t had the resources or the right processes, to provide a fast, obstacle-free customer journey. The sort of small, low-intervention experience we all expect. An open road, an open roof, with the wind in your hair kind of journey.

However, up until now there’s not been very much we could do about it. No insulation, no quick fix.

Now There Is

Castlight Financial has developed a range of tools to help credit risk professionals do exactly that. The Affordability Passport uses open banking technology to provide a platform for prospective borrowers to share their transactional data in real time with a lender. Prospective borrowers’ earnings and expenditure are categorised into over 150 categories and the information merged with credit performance data to reveal the borrower’s ability to afford a loan – the Affordability Passport. /more
The beauty of this for the customer is that the whole process is completed in under 10 minutes. There’s no need for them to produce bank statements and payslips and there’s no need for any further compliance work either.

Within 10 minutes the broker has a comprehensive affordability check, right there on the screen.

And the customer’s journey? Its fast, efficient and hassle free. There’s no reason to stop and get off. There’s nothing to cause leakage.

It’s a Japanese bullet train kind of journey – efficient and fast. Very fast. 603 km per hour fast.