Mr. Bo Alberg is Vice-President of Alm. Brand Bank and has responsibility for the bank’s retail and SME business. In this article, he presents his experience of implementing Experian’s New Business SM solution for credit scoring at customer level, and how it has enabled the bank to have full control over its business, including multi-channel capability and decentralised credit decision-making.

Part of the Alm. Brand A/S Danish financial services group, Alm. Brand Bank has business activities in retail banking, wholesale banking and automotive finance. In its retail banking activities Alm. Brand Bank targets private customer segments offering a wide range of banking products, focusing on providing attractive prices and high quality personal advice. Retail banking is particularly focused on tailoring unique solutions to customers insured with Alm. Brand – currently the fourth largest insurance company in Denmark.

The retail banking division of Alm. Brand Bank operates as a full service bank for its private customers with the main strategic focus of its operations on positively contributing to the group results and servicing the Alm. Brand insurance customer base of 450,000 households. With a total market share of 1-2% these activities are conducted through a network of channels, including 25 branches, 12 affiliate offices, 250 real estate agencies, a call centre and its website.

In pursuing its organisational strategic goals, when making customer lending decisions the bank looks at the customer first with everything else coming after. The decision to accept or reject an application depends solely on the customer's risk score, which is derived from factors including age, income and possible bad debt standing coming from bureau information. The value of the loan or credit that is offered to accepted applications depends exclusively on the income and debt of that person. A yes/no decision is reached by segmenting applicants into risk classes, cutting off approximately 15% as 'No'. The next step is to calculate the total debt of the customer with the traditional budget estimate replaced by an income/debt ratio, followed by a calculation of the applicant's unsecured debt.  Applying the policy and product rules then enables the bank to arrive at a final decision for the applicant. The process is illustrated below:

The conclusions that can be drawn from the experience of using Experian’s New Business SM solution are extremely positive. The bank now has full flexibility when changing credit policies, and any changes required are completed within a few hours. The New Business SM system is able to handle ALL demands, including 44 pages of credit policies, without ANY credit compromise having to be made. The bank now has great confidence in its ability to manage its portfolio, as everything is documented and accounted for – every loan is monitored and tracked. As a result of implementing New Business SM, Alm. Brand Bank how has full control and is more adaptable and flexible than ever before. 

In terms of recent activities and looking to the future, an enterprise-wide behavioural scoring model has been developed and is currently being implemented. Implementing credit into the CRM system will enable more accurate monitoring of customers for marketing purposes, and focusing on pricing of loans and other products will see Alm. Brand Bank move from a current product-based pricing method to a customer pricing approach later this year.

Bo Alberg - Vice President, Retail Banking, Alm. Brand Bank - from the presentation given at the Experian SM User Forum 2006

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