Respondents also report rise in customers requesting changes to mortgage contract
FICO (NYSE:FICO), a leading predictive analytics and decision management software company, and Efma today announced the results of the eighth European Credit Risk Survey, which measures retail bankers’ outlook for credit delinquencies and the availability of credit. Bankers also responded to questions about changing customer behavior, noting that customers are more likely than before to switch accounts to a different bank, complain to a regulator and request changes to their mortgage terms.
In the May-June 2013 survey, 41 percent of bankers said customers are more likely than before to switch their savings account to a different bank, and 42 percent said the same for current accounts. By contrast, just 14 percent said customers were more likely than before to open a new account at their current bank. While 54 percent of respondents said customers are more likely than before to complain to a regulator, just 18 percent said customers were more likely to refer their bank to a friend.
Additionally, more than two-thirds of respondents said that customers are more likely than before to request changes to their mortgage contract. And more than 50 percent said that customers are more likely to use alternative sources of credit.
“Unsatisfied customers are more likely to take their business elsewhere,” said Daniel Melo, senior director of solution consulting for FICO in Europe, the Middle East and Africa. “This is why so many European banks are now focused on measures such as the Net Promoter Score, so they can understand the severity of customers’ dissatisfaction and address it. Banks clearly can no longer view their customers as complacent.”
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“We are measuring our success using NPS, which we started using a few months ago,” said John Pears, credit risk and operations director at Shop Direct Group in the UK. “We are finding this gives us greater insights and more actionable feedback than a customer satisfaction survey. There is a big difference between being asked if something is OK and being asked if you would actually recommend the company.”
“CaixaBank has developed an internal quality indicator, the Personal Service Index (ISP), that we use to understand the needs of our customers through the sales network,” said Manuel Marcet Alcaraz, director of risk policy and infrastructure at Spain’s CaixaBank.“This tool has helped us monitor trends and service levels, and implement actions to improve our services. Innovation and technology are key priorities to deliver on customer expectations. For example, our customer transactions through mobile banking are already the second largest channel, after internet banking.”
The survey found that the forecast “credit gap” for small businesses has risen, after falling in the last survey. While 46 percent of bankers believe the amount of credit requested by SMEs will rise, only 35 percent believe the credit supply will rise. For consumers, the gap is smaller — 39 percent foresee a demand increase, 33 percent foresee a supply increase.
The forecast for delinquencies is lower overall than in previous surveys, but still elevated. More than 40 percent of respondents foresee higher levels of delinquencies for mortgages and overdrafts, and for small business loans the figure climbs to 52 percent.
“These forecasts vary by market, but we expect them to remain high until we see a recovery for the Eurozone,” said Patrick Desmarès, secretary general of Efma. “Both credit supply and demand are at low levels for many European countries.”
More than 80 risk managers from 26 countries participated in the eighth European Credit Risk Survey. A detailed report, including specific results for the UK/Ireland, Germany/Austria/Switzerland and Spain/Portugal, is available online. Participants included credit-granting institutions ranging from local banks to global institutions.
As a global not-for-profit organisation, Efma brings together more than 3,300 retail financial services companies from over 130 countries. With a membership base consisting of almost a third of all large retail banks worldwide, Efma has proven to be a valuable resource for the global industry, offering members exclusive access to a multitude of resources, databases, studies, articles, news feeds and publications. Efma also provides numerous networking opportunities through working groups, online communities and international meetings.
For more information: www.efma.com
FICO (NYSE: FICO), formerly known as Fair Isaac, is a leading analytics software company, helping businesses in 80+ countries make better decisions that drive higher levels of growth, profitability and customer satisfaction. The company’s groundbreaking use of Big Data and mathematical algorithms to predict consumer behavior has transformed entire industries. FICO provides analytics software and tools used across multiple industries to manage risk, fight fraud, build more profitable customer relationships, optimize operations and meet strict government regulations. Many of our products reach industry-wide adoption — such as the FICO® Score, the standard measure of consumer credit risk in the United States. FICO solutions leverage open-source standards and cloud computing to maximize flexibility, speed deployment and reduce costs. The company also helps millions of people manage their personal credit health. FICO: Make every decision count™. Learn more at www.fico.com
For FICO news and media resources, visit www.fico.com/news
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Except for historical information contained herein, the statements contained in this news release that relate to FICO or its business are forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially, including the success of the Company’s Decision Management strategy and reengineering plan, the maintenance of its existing relationships and ability to create new relationships with customers and key alliance partners, its ability to continue to develop new and enhanced products and services, its ability to recruit and retain key technical and managerial personnel, competition, regulatory changes applicable to the use of consumer credit and other data, the failure to realize the anticipated benefits of any acquisitions, continuing material adverse developments in global economic conditions, and other risks described from time to time in FICO’s SEC reports, including its Annual Report on Form 10-K for the year ended September 30, 2012 and its last quarterly report on Form 10-Q for the period ended March 31, 2013. If any of these risks or uncertainties materializes, FICO’s results could differ materially from its expectations. FICO disclaims any intent or obligation to update these forward-looking statements.
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