New Business SM

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In today’s competitive market it is becoming increasingly important to be able to rapidly and accurately understand applicants and their potential as customers.

Customer AcquisitionAt the heart of Decision Analytics origination from Experian is the new business decisioning system, New Business SM. New Business SM allows each applicant to be treated as an individual and enables fast, accurate and consistent decision making.

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New Business SM deploys the advanced Strategy Management decision engine which, when combined with predictive analytics and expertise through consulting, creates a system that enable organisations to maximise, automate and control new business decisioning.

Using sophisticated scoring and segmentation techniques, the system provides the ability to accurately assess and make a decision on an applicant, identifying optimal customers and offering them a tailored package to suit their needs and the business objectives.

The new business strategies are controlled by one or more business users on the desktop and then deployed across the organisation, giving complete control to define, test and manage business strategies without the need for programming resource.

The system improves operational efficiency by enabling the automation of manual processes and the redeployment of key resources to concentrate on strategic, rather than tactical, challenges.

Use all available information to make a decision as to which applicants to accept, refer and decline, tailoring the terms of business offered to the accepted applicants according to their profile.

Benefits

  • Decisions and terms can be set and adjusted by the business user, providing the flexibility to ensure the most appropriate decisions are being applied to each new customer.
  • From the desktop, strategies are implemented across the operation to every application point, giving a consistent approach to the acquisition operation.
  • Users have complete control to create, maintain and improve strategies.
  • Through simulation in the analytical environment and Champion/Challenger facilities, strategies can be evaluated and evolved for maximum performance.

Rapid decisioning

In today’s competitive market it is becoming increasingly important to be able to rapidly and accurately understand applicants and their potential as customers.

At the heart of the Decision Analytics origination solution from Experian is the new business decisioning system, New Business SM. It deploys the advanced Strategy

Management decision engine which, when combined with predictive analytics and expertise through consulting, creates a system that enable organisations to maximise, automate and control new business decisioning.

Using sophisticated scoring and segmentation techniques, the system provides the ability to accurately assess and make a decision on an applicant, identifying optimal customers and offering them a tailored package to suit their needs and the business objectives.

The new business strategies are controlled by one or more business users on the desktop and then deployed across the organisation, giving complete control to define, test and manage business strategies without the need for programming resource.

The system improves operational efficiency by enabling the automation of manual processes and the redeployment of key resources to concentrate on strategic, rather than tactical, challenges. New Business SM allows each applicant to be treated as an individual and enables fast, accurate and consistent decision making.

Business user creates and controls the acquisition decisioning on the desktop, with the elements of the new business strategy clearly illustrated by graphical business objective flows. The system has been designed to offer the ultimate flexibility in the development and maintenance of strategies.

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Accurate decisioning is only possible with a detailed understanding of each applicant

New Business SM combines application data with detailed information from external and internal sources to gain a complete picture of each applicant. At every stage of the process, the applicants can be segmented into different profiles in order to apply relevant strategies, decisions and terms. Having segmented the applicants, distinct scorecards and policy rules are created and applied to each population profile. This makes it possible to accurately assess the potential value of new customers as well as the risk, creating scope for targeted cross selling and up-selling.

Deployment

The flexible software and extensive expertise enables the creation of a fully-customised system with the advantages of a rapid and streamlined delivery onto the operational platform. Interfaces are flexible for rapid deployment against both new and legacy systems, including rapid integration with the application processing system.

New Business SM systems have been implemented on all major operating systems and platforms. The system is platform independent enabling true enterprise-wide decisioning.

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Improving strategic effectiveness and operational efficiencies

Within months of launching its retail business the bank became a significant player in sales finance, offering personal loans, credit cards, automotive and mortgage lending.

The bank has always been committed to robust risk management and the highest standard of customer service. It used scoring models to assess customers as part of the credit underwriting process in order to provide a robust statistical assessment of customers.

However, the growing portfolio, multiple products on offer and the need to balance rapid customer response with accurate credit decisioning provided the bank with a significant challenge in terms of the process and technology used in the lending decision.

The risk team recognised that an advanced decision system could help the bank to achieve its objectives of:

  • Increasing the accuracy of the lending decisions
  • Implementing multiple credit strategies
  • Improving efficiency and consistency of the lending process

Following an extensive vendor review, the bank chose Experian to deliver its New Business SM system to automate and manage origination decisions throughout the business.

The New Business SM system automates and streamlines the origination decision-making process, reducing operational costs, increasing the accuracy of the decisions and enhancing risk management across the bank.

Benefits

  • Decreased application processing time by 30% with a streamlined process
  • Enhanced customer service with accurate decisions delivered faster
  • Controlled operational costs and reduced the need for manual underwriting resource by 50%
  • Reduced data errors by 10 times enabling more accurate scoring, decisions and risk management
  • Control in the hands of the risk team with the ability to rapidly and easily implement new strategies
  • Rapid system and strategy implementation to realise benefits quicker

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Customer acquisition for unsecured lending

In today’s unsecured lending marketplace customer expectations are increasingly high and competition is fierce. As competition increases customers have dozens or even hundreds of credit offers and lenders to choose from.

This proliferation of offers can reduce brand loyalty and lenders will have to work much harder to attract, acquire and retain customers.

As the origination process often handles the very first interaction with the applicant, it is critical for an applicant to have a positive ‘buying experience’, which essentially equates to a fast turnaround time for the decision to be made coupled with the offering of the appropriate products and services at the expected terms of business (e.g. interest rates, limits, facilities). A swift decision with the customer receiving their requested credit facility promptly is the first step in turning applications into loyal and profitable customers.

A variety of pressures (market, regulatory, competitive) will continue to force change in the unsecured lending arena. In response to these challenges the strategies being deployed by leading organisations are becoming increasingly sophisticated.

Risk based pricing enables organisations to improve acceptance rates, write more business and satisfy customers’ demands. Regulatory developments have seen the presence of models to calculate the required elements of Basel II now featuring in origination systems.

This white paper discusses the requirements of an effective and efficient origination solution for unsecured lending covering the business model, application process and system set-up with the aim of enabling a rapid response to changing customer needs and market demands together with managing portfolio risk whilst delivering growth

A profit driven approach to risk-based pricing

The concept of pricing according to risk isn’t new; it is common practice in the insurance industry and has been used in the credit industry for over a decade.

Risk based pricing is the practice of considering the ‘risk’ of an applicant and applying different lending interest rates and terms based on their profile.

 Those customers who are considered lower risk receive better terms, while those who are considered higher risk are offered higher interest rates, reflecting the potentially increased costs and losses associated with lending to those ‘riskier’ customers.

The adoption of risk based pricing can bring many benefits to the financial institution implementing the strategy, the customers and financial market as a whole.

Lenders can increase volumes, take-up and bookings whilst reducing attrition and mitigating the effects of adverse selection.

For customers, those who are lower risk are rewarded for their good financial performance, with higher risk customers gaining more access to credit.

The financial market and economy benefits by more of the population being brought into the mainstream lending process.

However risk based pricing has its critics, especially from some consumer protection organisations.

This paper reflects the many years of experience Experian has gained from working with financial lenders implementing risk management decision support and scoring systems.  

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