18 July 2014
Designing new financial products with predictive analytics
Carving out new business opportunities in banking is made possible by knowing your customer well. Capita's predictive analytics experts, Euristix, used a wealth of historical transaction data and advanced behavioural analytics to develop a new financial product for a niche market.
Euristix's client had been managing bank accounts and providing short term loans for its customers for several years. Their customer base includes individuals who have previously been refused a current account with high street banks or building societies, and in some cases have experienced bankruptcy.
Together with their client, Euristix saw an opportunity to offer their existing customers longer-term personal loans. Their client had limited experience in risk management and modelling, and so required support to develop an appropriate product proposition, work through the underwriting requirements and establish the necessary reporting processes.
In partnership with Euristix they were able to leverage data on their customers’ past behaviours in order to:
- build a decision tool that identified which customers were likely to repay a longer-term loan; and
- develop products tailored to different customer segments in order to minimise risk and maximise profit.