Customer Communications
Bring Value and Clear the Regulatory Hurdles
Bill Brown
Director, Product Marketing
FICO
Vance Gudmundsen
Regulatory Counsel
FICO
© 2014 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
Our Speakers
Vance Gudmundsen
Vice President Government Affairs and Data Privacy, FICO
He is a Vice President in the Legal Department, responsible for government affairs, regulatory compliance,
and data privacy. In his career, Vance has advised several major financial institutions as in-house
counsel, including Capital One Bank, Nationwide Insurance, Erie Insurance Group, and the Illinois
Insurance Department.
Bill Brown
Director, Product Marketing/Compliance, FICO
He has spent the past twenty five years defining and managing the customer experience for some of the
largest companies in the world. His experience in card operations includes MBNA America and Providian
Financial where his roles have taken him through the entire card and customer lifecycle. Since joining FICO,
he has worked around the world and across multiple industry verticals to define client opportunities to
engage and deliver a differentiated customer experience
© 2014 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
Customer Communications
At every stage of the customer lifecycle you will have
opportunities to engage your customers, but you will need to
anticipate regulatory hurdles.
New technologies offer promising ways to communicate with your customers—but when you
manage customer service, fraud prevention and detection, marketing, and debt collection
and recoveries, there are numerous regulatory challenges.
We will discuss strategies and best practices to take advantage of new ways to connect with
customers and grow business, while avoiding the regulatory landmines.
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© 2014 Fair Isaac Corporation. Confidential.
Customer Communications Have Evolved
► The
traditional approach was to use human call center; letters
► In
the late 1990s, one-way messages: Email, SMS and voice blast, by channel
and product
► 10
years ago, two-way messages: interaction in Automated Voice and SMS but
still siloed
►5
years ago, rules driven: communication by segment or event, sometimes a
dialogue
► Today,
multiple channels on a single platform: contacting the customer through
the right channel at the right time
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© 2014 Fair Isaac Corporation. Confidential.
The Mobile Explosion
Monumental Shift Transforms Lender/Customer Landscape
5
1.5 billion
325+ MM
245 MM
Smartphones worldwide
by end of 2014
Tablets worldwide by 2015
Employees will be
classified as Mobile
Workers by 2015
© 2014 Fair Isaac Corporation. Confidential.
Generation M—Modern Urban Consumers
Demand the Ability to Live Their Lives by Mobile
60% who switched banks:
Mobile banking availability a
significant factor
USA
Federal Reserve
1 billion smart phone users
11% plan to purchase tablet
India
Financial firms who think mobile
banking is important to customers:
50% currently
71% by 2015
UK
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© 2014 Fair Isaac Corporation. Confidential.
FUJITSU
eMarketer
Mobile payments:
$640 million in 2011
$2 billion in 2016
USA
eMarketer
Multiple Channels and Robust Interactions Are Available
Voice
Text
Email
MobileDirect
Online
Social Media
7
© 2014 Fair Isaac Corporation. Confidential.
Contact the customer
through the right channel
at the right time…
Financial Services Customer Expectations
Infosys; FINsights
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© 2014 Fair Isaac Corporation. Confidential.
Not All Communications Are Alike
► How
►
is the communication made?
Mail, email, phone, text, mobile direct, social media,
automatic dialer
► Where
►
Residence, mobile, social media, business
► Where
►
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is the purpose of the communication?
Service, advertising/marketing, collections
► Will
►
did the contact information come from?
Application, family member, external source
► What
►
is the communication made to?
the customer expect the communication?
Customer Agreement, express consent, implied consent,
“deemed” consent
© 2014 Fair Isaac Corporation. Confidential.
Opportunities to Engage Your Customers
► As
email, mobile apps, and automated communications channels are used more
frequently, customers become more familiar and responsive
► The
customer lifecycle can be divided into three segments: servicing, marketing,
and collections
Multiple lifecycle events require action …and benefit from interaction
New Account
Offer
Application
Complete
Originations
10
Welcome
Package
© 2014 Fair Isaac Corporation. Confidential.
Customer
Service
Updates
Fraud/Risk
Alerts
Customer
Income
Retrieval
Credit Line
Increase
Late
Payment
Notification
Request 2nd
Card
New T&A
Documents
Transferred
1st Party
Collections
Card
Received
Verification
3rd Party
Collections
Build an Integrated, Compliant Approach to Customer
Communications
► Make
sure your customer interaction strategy
is built for all the interactions your business
wants and not just one business line
► Discuss
the types of communications that
you want to deliver to customers and the
channels that you want to use
► Consider
the regulatory challenges your
strategy will encounter
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© 2014 Fair Isaac Corporation. Confidential.
Compliance Considerations in Service
► Consumer
Financial Protection Act—“UDAAP”
► “abusive”
means taking advantage of the consumer’s inability to protect himself, or his
reliance on the lender to act in his best interest
► Fair
Credit Reporting Act 605(h) and 615(e)—customer verification for address
changes, second card requests (KYC and other red flags)
► Telephone
Consumer Protection Act—automated and predictive dialers for phone
and text
► Service
vs. marketing (ABA petition to FCC to exempt fraud and data breach alerts)
► residential vs. mobile phone
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© 2014 Fair Isaac Corporation. Confidential.
Compliance Considerations in Marketing
► Telemarketing
► Telephone
Consumer Protection Act: phone and text; DNC list
► CAN-SPAM:
► ROSCA:
Sales Rule: phone
transactional vs. promotion; opt-out database
Internet based sales (“free trial” and “negative option”)
► E-SIGN:
electronic signatures require disclosures; access to paper copy;
record retention
► Gramm-Leach-Bliley/FCRA:
3rd party marketing
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© 2014 Fair Isaac Corporation. Confidential.
privacy notices; opt-out databases for affiliate and
Compliance Considerations in Collections and Recoveries
► Fair
Debt Collection Practices Act
► CFPB
will apply FDCPA to 1st party collections (UDAAP authority)
► Mini-Miranda warnings; G-notices; prohibited hours of collections
► Some courts won’t permit default judgments without documentation
► TCPA and
CTIA—rules for automated or predictive dialers
► Does
dialer have the “capacity” to be automatic?
► What is “deemed” consent?
► Who is the “called party”
► CTIA/Verizon: no text messages for debt collection
► Texas requires registration of automatic dialers
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© 2014 Fair Isaac Corporation. Confidential.
Set the Customer Expectations Early—Welcome Package
► Explain
what servicing activities your
customer should expect
► Credit
line increases; fraud alerts; product
enhancements (e.g., overdraft protection) and
other offers
► Keep record of opt-in consent and establish an
opt-out database
► Use Net Number Lookup to determine
possibility of channel use
► If you want to use SMS, confirm handset
► Add contact card to capture email address, toll
free #s, address for mobile application, define
short code used for SMS; ask about preferred
channels
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© 2014 Fair Isaac Corporation. Confidential.
Reinforce Customer Expectations
► Confirm
customer activity: address change; large account use; payment received;
authorized user; new credit cards; new product requests
► Transaction
alerts: fraud and post authorization confirmations
► Transaction
dispute (complaint) processing
► Customer
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defined “Tell Me When Alerts”
© 2014 Fair Isaac Corporation. Confidential.
Account Management: Income Retrieval
► Income
can be used for over-limit and overdraft fee avoidance
► Income
can be used for “ability to pay” calculations
► Query:
► Define
does it matter whether the lender or the customer initiates CLI?
activity as servicing (implied consent):
“...to better service and manage your account(s) we would
like to confirm your annual income. Please respond, as
follows...”
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© 2014 Fair Isaac Corporation. Confidential.
Marketing: New Products and Promotional Pricing
► Use
automated communications
► Automate
delivery of the customer agreement
► Automate customer reminders, updates, and disclosures
► Marketing
options can promote customer loyalty,
if expected
► Promotional
pricing
► Add-on products
► Third party offers
18
© 2014 Fair Isaac Corporation. Confidential.
Collections: Anticipate Hurdles
► Gain
channel acceptance; get prior express
consent to contact the customer before default
► Automated
channels should be encouraged, but
Verizon is preventing collections SMS volume on
their technology
► Don’t
automate the collection process if
customer objects
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© 2014 Fair Isaac Corporation. Confidential.
Mobile Phone and Mobile Payment Users Will engage if
You Encourage Them
90
Mobile Phone Opportunities
► With
the customer at all times
► Increased right party contacts
► Encourages faster response
“in the moment”
► Promised payment kept rate
►
►
For live agents 77%
For Automation 85–90%
Engage the customer from
day one to provide channels
the customer will rely on
80
70
60
50
40
30
20
10
0
% paying within 30
minutes
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© 2014 Fair Isaac Corporation. Confidential.
% paying within 48
hours
Conclusions
► Consider
the customer lifecycle holistically
►
Build trust early in the customer life cycle and treating the customer fairly throughout
► Don’t define success by reducing expenses in a single business line
► Define
your compliance standards early
►
Define your channels and interactions to understand what is required to be compliant
► Consider the legal hurdles you may have to overcome
► Be
flexible: treat your customer individually; adapt to new compliance hurdles
Multiple lifecycle events require action …and benefit from interaction
New Account
Offer
Application
Complete
Originations
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Welcome
Package
© 2014 Fair Isaac Corporation. Confidential.
Customer
Service
Updates
Fraud/Risk
Alerts
Customer
Income
Retrieval
Credit Line
Increase
Late
Payment
Notification
Request 2nd
Card
New T&A
Documents
Transferred
1st Party
Collections
Card
Received
Verification
3rd Party
Collections
Thank You!
Bill Brown
billbrown@fico.com
203-956-2629
Vance Gudmundsen
vancegudmundsen@fico.com
703-444-4465
© 2014 Fair Isaac Corporation. Confidential.
This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporation’s express consent.
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© 2014 Fair Isaac Corporation. Confidential.
Please rate this session online!
Bill Brown
billbrown@fico.com
24
© 2014 Fair Isaac Corporation. Confidential.
Vance Gudmundsen
vancegudmundsen@fico.com