Technology Solutions to Manage Instant Credit Card Decisions and Improve Customer Acquisition & Retention

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Direct mail has historically been the main source for originating new credit card customers with a less risky credit profile. To reduce risk of credit and/or fraud loss, credit card issuers typically prescreen prospects who receive a direct mail solicitation and/or an invitation to apply for credit. The batch prescreen process eliminates prospects identified as a potential credit or fraud risk from the mailing. Other acquisition channels such as the internet, take-ones, and mass media do not receive this review and typically are more risky acquisition channels. Consequently, credit risk managers defend that direct mail credit card account acquisition is more expensive than the internet and take-one acquisition channels, but originate more customers that are profitable because of the screening. This report by Dennis Moroney, research director at TowerGroup, a Corporate Executive Board Company examines vendor technology solutions that support the shift in new credit card account acquisition and retention strategies to ones that rely less on the direct mail channel. To be successful, the instant decisioning process must minimize issuer credit risk and maximize potential profits through active customer card usage and customer retention.

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