Are New Guidelines Putting a Key Source of 2013 Revenue (Credit Line Increases) at Risk?

In their zeal to help us manage our businesses better and to do right by our customers and banks, new regulatory guidelines may be unintentionally making our jobs a bit more difficult. We’ve talked to various regulators and have heard different things. When it comes to marketing, there is one area they seem to be focusing their enforcement efforts on around the globe, which is acquiring “fresh data”. The ability to prove you have communicated with the customer since receiving their initial application data is key.

Specific to Credit Line Increases, they are asking that your recent communication with the borrower proves they agreed to pay the loan in full and the borrower has the ability to pay the loan. In that process, they are looking for evidence of agent judgment, postponed decisions, inconsistency, and disparate treatment.

Essentially they are asking you to prove you did not do something. The proving a negative is what our clients are finding most difficult.

Subsequently, some clients believe the only surefire way to gather evidence for a Credit Line Increase is to have an outbound call involving a conversation with the customer. Unfortunately outbound calls are expensive and it’s simply not wise to utilize them as your main strategy. Our solution can take customers to a web based platform where they can enter their information and enables real time decisioning. Truly any solution must capture and document borrower agreement, individualized program offers via dialogue with the borrower, allow the lender to prove willingness and ability, and with fair and consistent decisioning. Our solution enables this successfully, repeatedly, and cost effectively.

In addition to the cost effective benefit of the web portal, it has been shown that consumers overwhelmingly prefer it. We’ve observed that of those who are eligible and offered Credit Line Increase opportunities, approximately 85% respond directly to the website. Of that 85%, the majority (between 80-90%) qualify.

Ultimately our solution enables you to say, here are my policies, here is my execution of those policies in the system, and here is individually audited proof that they were executed consistently. This represents a great revenue opportunity in 2013, as it relates to Credit Line Increases, that could otherwise be hindered as a consequence of these regulatory actions.