Fraudscreen's pre-delinquency webcast, looking at strategies and tactics for reducing bad debt before people miss a single payment. Aimed and collections and risk specialists. Pitched at a practitioner / expert level.

1. WEBCAST
The Life-cycle of a Debtor:
Pre-Delinquency: Strategies and tactics for reducing
bad debt before people miss a single payment

2. © 2009. Copyright Fraudscreen Ltd.
The three stages of debt...
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 2

3. © 2009. Copyright Fraudscreen Ltd.
The three stages of debt...
Paper one:
Pre-delinquency
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 2

4. © 2009. Copyright Fraudscreen Ltd.
The three stages of debt...
Paper one: Paper two:
Pre-delinquency Collections
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 2

5. © 2009. Copyright Fraudscreen Ltd.
The three stages of debt...
Paper one: Paper two: Paper three:
Pre-delinquency Collections Recoveries
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 2

6. © 2009. Copyright Fraudscreen Ltd.
Introducing the speakers
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 3

7. © 2009. Copyright Fraudscreen Ltd.
Introducing the speakers
John Sharman
Sales & Marketing
Director, Fraudscreen
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 3

8. © 2009. Copyright Fraudscreen Ltd.
Introducing the speakers
John Sharman Peter Taylor
Sales & Marketing Credit & Collections
Director, Fraudscreen Director, Fraudscreen
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 3

9. © 2009. Copyright Fraudscreen Ltd.
Introducing the speakers
John Sharman Peter Taylor Helen McNab
Sales & Marketing Credit & Collections Director
Director, Fraudscreen Director, Fraudscreen ScorePlus
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 3

10. © 2009. Copyright Fraudscreen Ltd.
Agenda
FRAMEWORK PRE-DELINQUENCY COLLECTIONS RECOVERIES
Objectives Helen
Data & Analytics Helen
Strategy Design Helen
Operational
Peter
Design
Strategy Delivery
Strategy
Peter
Evaluation
Budget Definition Peter
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 4

11. © 2009. Copyright Fraudscreen Ltd.
Agenda
FRAMEWORK PRE-DELINQUENCY COLLECTIONS RECOVERIES
Objectives Helen
Data & Analytics Helen
Strategy Design Helen
Operational
Peter
Design
Strategy Delivery
Strategy
Peter
Evaluation
Budget Definition Peter
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 4

12. © 2009. Copyright Fraudscreen Ltd.
Programme framework
See: Part One, p.6 Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 5

13. © 2009. Copyright Fraudscreen Ltd.
Programme framework
FRAMEWORK
Objectives
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.6 Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 5

14. © 2009. Copyright Fraudscreen Ltd.
Programme framework
FRAMEWORK
Objectives
Objectives
Data & Analytics
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.6 Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 6

15. © 2009. Copyright Fraudscreen Ltd.
Programme framework
FRAMEWORK
Objectives
Objectives
Data & Analytics
Data & Analytics
Strategy Design
Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.6 Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 7

16. © 2009. Copyright Fraudscreen Ltd.
Programme framework
FRAMEWORK
Objectives
Objectives
Data & Analytics
Data & Analytics
Strategy Design
Design
Operational Design
Strategy Delivery
Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.6 Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 8

17. © 2009. Copyright Fraudscreen Ltd.
Programme framework
FRAMEWORK
Objectives
Objectives
Data & Analytics
Data & Analytics
Strategy Design
Evaluation Design
Operational Design
Strategy Delivery
Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.6 Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency 9

18. © 2009. Copyright Fraudscreen Ltd.
Programme framework
FRAMEWORK
Objectives
Objectives
Data & Analytics
Data & Analytics
Strategy Design
Evaluation Design
Operational Design
Strategy Delivery
Delivery
Strategy Evaluation
Budget Definition
Budget
See: Part One, p.6 Live web seminar: The Life-cycle of a Debtor 10
Webcast: pre-delinquency

19. © 2009. Copyright Fraudscreen Ltd.
Agenda
FRAMEWORK PRE-DELINQUENCY COLLECTIONS RECOVERIES
Objectives
Data & Analytics Helen
Strategy Design
Operational
Peter
Design
Strategy Delivery
Strategy
Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 11
Webcast: pre-delinquency

20. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Tell me more about data & analytics
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 12
Webcast: pre-delinquency

21. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Tell me more about data & analytics
FRAMEWORK
Objectives
How can companies be sure that they are
not wasting money on pre-delinquency
Data & Analytics
actions with ‘false positives’?
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 12
Webcast: pre-delinquency

22. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 13
Webcast: pre-delinquency

23. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
• Key issue: hard to identify, sufficiently well
Objectives
Making contact at the right time
Avoiding un-necessary customer irritation
Data & Analytics
Avoiding wasted expense
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 13
Webcast: pre-delinquency

24. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
• Key issue: hard to identify, sufficiently well
Objectives
Making contact at the right time
Avoiding un-necessary customer irritation
Data & Analytics
Avoiding wasted expense
Strategy Design
Behavior Score:
Chance of missing a
Operational Design payment
65%
Strategy Delivery 50%
45%
Strategy Evaluation 36%
30%
23%
Budget Definition 17%
-
-
Live web seminar: The Life-cycle of a Debtor 13
Webcast: pre-delinquency

25. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
• Key issue: hard to identify, sufficiently well
Objectives
Making contact at the right time
Avoiding un-necessary customer irritation
Data & Analytics
Avoiding wasted expense
Strategy Design
Behavior Score:
Chance of missing a
Operational Design payment
65%
Strategy Delivery 50%
45%
Strategy Evaluation 36%
30%
23%
Budget Definition 17%
-
-
Live web seminar: The Life-cycle of a Debtor 13
Webcast: pre-delinquency

26. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.8 Live web seminar: The Life-cycle of a Debtor 14
Webcast: pre-delinquency

27. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
Objectives • Possible solutions: better discrimination
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.8 Live web seminar: The Life-cycle of a Debtor 14
Webcast: pre-delinquency

28. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
Objectives • Possible solutions: better discrimination
Strategic: bespoke models
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.8 Live web seminar: The Life-cycle of a Debtor 14
Webcast: pre-delinquency

29. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
Objectives • Possible solutions: better discrimination
Strategic: bespoke models
Data & Analytics Tactical: integrating external data into existing models
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, p.8 Live web seminar: The Life-cycle of a Debtor 14
Webcast: pre-delinquency

30. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Avoiding false positives
FRAMEWORK
Objectives • Possible solutions: better discrimination
Strategic: bespoke models
Data & Analytics Tactical: integrating external data into existing models
Strategy Design Behaviour score External index risk percentile
Chance of 1 - 20 21 - 40 41 - 60 61 - 80 81 - 100
missed payment Highest 20% Lowest 20%
Operational Design
65% 73% 59% 63% 60% 56%
50% 56% 50% 50% 45% 39%
Strategy Delivery 45% 51% 41% 40% 34% 34%
36% 46% 38% 31% 30% 28%
Strategy Evaluation 30% 42% 30% 30% 28% 27%
23% 33% 26% 18% 17% 17%
17% 26% 14% 14% 14% 14%
Budget Definition … … … … … …
… … … … … …
See: Part One, p.8 Live web seminar: The Life-cycle of a Debtor 14
Webcast: pre-delinquency

31. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Tell me more about data & analytics
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 15
Webcast: pre-delinquency

32. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Tell me more about data & analytics
FRAMEWORK
Objectives
How do you design a scorecard that can
deal with the short time horizons
Data & Analytics
needed in pre-delinquency?
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 15
Webcast: pre-delinquency

33. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

34. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

35. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
• Account management scorecard example:
Strategy Evaluation
current and active at observation
Budget Definition
18 month outcome period
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

36. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
• Account management scorecard example:
Strategy Evaluation
current and active at observation
Budget Definition
18 month outcome period
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

37. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
• Account management scorecard example:
Strategy Evaluation
current and active at observation
Budget Definition
18 month outcome period
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

38. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

39. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
• Entry to collections example:
Strategy Evaluation
one payment missed at observation
Budget Definition
6-12 month outcome period
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

40. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
• Entry to collections example:
Strategy Evaluation
one payment missed at observation
Budget Definition
6-12 month outcome period
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

41. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Key issue: traditional behaviour scores focus on account
Objectives
management or collection prospects
do not ‘hit the mark’ for pre-delinquency purposes
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
• Entry to collections example:
Strategy Evaluation
one payment missed at observation
Budget Definition
6-12 month outcome period
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

42. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

43. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Possible solutions: bespoke models
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

44. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Possible solutions: bespoke models
Objectives
dimensions reflect ‘use’:
- development sample ‘prospects’
Data & Analytics
- outcome periods
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

45. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Dealing with short time horizons
FRAMEWORK
• Possible solutions: bespoke models
Objectives
dimensions reflect ‘use’:
- development sample ‘prospects’
Data & Analytics
- outcome periods
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation • Pre-delinquency scorecard example:
Current and active, but high risk at observation
Budget Definition
3 month outcome period
Live web seminar: The Life-cycle of a Debtor
Webcast: pre-delinquency

46. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Tell me more about operational design
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 19
Webcast: pre-delinquency

47. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Tell me more about operational design
FRAMEWORK
Objectives When it comes to operational design
for pre-delinquency, what key action
Data & Analytics
could people take immediately?
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
Live web seminar: The Life-cycle of a Debtor 19
Webcast: pre-delinquency

48. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Ask your team...
FRAMEWORK
Objectives
Data & Analytics
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, pp.13-14 Live web seminar: The Life-cycle of a Debtor 20
Webcast: pre-delinquency

49. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Ask your team...
FRAMEWORK
• Put the problem to an inter-disciplinary team
Objectives customer services staff
collections staff
Data & Analytics marketers
Strategy Design
Operational Design
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, pp.13-14 Live web seminar: The Life-cycle of a Debtor 20
Webcast: pre-delinquency

50. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Ask your team...
FRAMEWORK
• Put the problem to an inter-disciplinary team
Objectives customer services staff
collections staff
Data & Analytics marketers
• What customer triggers?
Strategy Design cancelled direct debits
reducing levels of payment?
Operational Design returned cheques?
Strategy Delivery
Strategy Evaluation
Budget Definition
See: Part One, pp.13-14 Live web seminar: The Life-cycle of a Debtor 20
Webcast: pre-delinquency

51. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Ask your team...
FRAMEWORK
• Put the problem to an inter-disciplinary team
Objectives customer services staff
collections staff
Data & Analytics marketers
• What customer triggers?
Strategy Design cancelled direct debits
reducing levels of payment?
Operational Design returned cheques?
• What should we say to the customers we identify?
Strategy Delivery what marketing vision?
how to avoid annoying the good payers whilst having a worthwhile
Strategy Evaluation conversation with the bad payers
Budget Definition
See: Part One, pp.13-14 Live web seminar: The Life-cycle of a Debtor 20
Webcast: pre-delinquency

52. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Ask your team...
FRAMEWORK
• Put the problem to an inter-disciplinary team
Objectives customer services staff
collections staff
Data & Analytics marketers
• What customer triggers?
Strategy Design cancelled direct debits
reducing levels of payment?
Operational Design returned cheques?
• What should we say to the customers we identify?
Strategy Delivery what marketing vision?
how to avoid annoying the good payers whilst having a worthwhile
Strategy Evaluation conversation with the bad payers
• How important is the pre-delinquency opportunity?
Budget Definition
See: Part One, pp.13-14 Live web seminar: The Life-cycle of a Debtor 20
Webcast: pre-delinquency

53. © 2009. Copyright Fraudscreen Ltd.
PRE-DELINQUENCY
Ask your team...
FRAMEWORK
• Put the problem to an inter-disciplinary team
Objectives customer services staff
collections staff
Data & Analytics marketers
• What customer triggers?
Strategy Design cancelled direct debits
reducing levels of payment?
Operational Design returned cheques?
• What should we say to the customers we identify?
Strategy Delivery what marketing vision?
how to avoid annoying the good payers whilst having a worthwhile
Strategy Evaluation conversation with the bad payers
• How important is the pre-delinquency opportunity?
Budget Definition • Is there an opportunity for a pilot scheme?
See: Part One, pp.13-14 Live web seminar: The Life-cycle of a Debtor 20
Webcast: pre-delinquency

54. © 2009. Copyright Fraudscreen Ltd.
Find out more…
www.fraudscreen.co.uk/lifecycle-part-one
Paper one:
Pre-delinquency Paper two:
Collections Paper three:
Recoveries
Live web seminar: The Life-cycle of a Debtor 21
Webcast: pre-delinquency