In Cross Sell, Customer Acquisition and Retention, Instant Decisioning, Prescreen

We all receive those credit card offers by mail that proclaim balance transfers at zero percent interest, a free airline ticket just for signing up, cash back on all purchases, platinum status upgrades and a plethora of other enticing reasons why we MUST have that card. Most of the offers I receive end up in the trash. Why? They aren’t specifically tailored to my needs and I already have the card that is. There isn’t anything wrong with this mass mailing approach, but I’d argue that there is a better way to acquire customers for new financial products. Instant prescreen.

Instant prescreen is not new. However, the applications of instant prescreen are evolving and provide a more cost effective, tailored approach to customer acquisition. The most common implementation of instant prescreen has typically been to solicit consumers where there isn’t a pre-existing financial relationship. For example, someone shopping at a department store is offered a store credit card as they are checking out. While that is still a common and effective practice, many financial institutions are now using instant prescreen with their current customers to find the most relevant products or services to offer.

There is much less risk in cross-selling to established customers because of their known history and the amount of data available to make informed decisions to the most profitable customers. Utilizing instant prescreen at the point of interaction whether that is the teller line, ATM, online or mobile can also increase acceptance rates if the right intelligence is applied. This intelligence comes from applying business rules and logic to data to determine the right offer to make in the moment. Banks are not only taking advantage of the wealth of information they have internally but are also utilizing alternative data sources in addition to the major credit bureaus to help them refine offers to their customers. The use of different types of data enables a more robust evaluation, allowing financial institutions to individualize offers instead of applying mass customization (or mass mail).

There are numerous other benefits to instant prescreen that outweigh the mass mailing, batch processing approach. You can use the same credit decisioning policy for instant prescreen as you would if the consumer initiated the transaction. This is not possible when doing batch processing because the data returned only includes a restricted amount of information. Additionally, batch offers need a second round of decisioning once a consumer accepts to verify the consumer currently meets the criteria for the offer. With mass offers the data is not always fresh, requiring that second look. With instant prescreen you can book the account and issue an account number or actual card right on the spot.

This is a great time for banks to focus on deepening relationships with the customers they already have by making tailored offers at every interaction. Mining their data to uncover the best product to present is much more effective than presenting a generic offer to everyone that walks in the door or logs on to the website. In fact, the decision returned based on what the data reveals might be that no offer is made. This scenario promotes a more positive interaction with the customer than offering something completely irrelevant to their needs or lifestyle. I’d much rather be given one meaningful offer than a stack of junk mail. Having the intelligence to know what type of product the customer may be searching for leads to higher acceptance and fewer offers in the round file.

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