Two large banking companies have agreed to use a risk assessment scoring service from eFunds Corp. that counts how often potential customers open and close accounts at other financial companies.
U.S. Bancorp and National City Corp. have agreed to use eFunds' QualiFile service to determine fraud risk when people open or apply for accounts, the Scottsdale, Ariz., company said Tuesday. Both banking companies are using an older eFunds service, New Account Chex; both services are offered through the company's Chex Systems Inc.
QualiFile creates a risk score by assessing how many accounts a potential customer has opened or closed, how often the customer orders checks, and how often the customer's checks bounce. The company uses data collected by eFunds' debit bureau, which collects information from banks and merchants.
"If people are ordering a lot of checks in a short period of time, that can indicate fraud," Martin Romain, eFunds' vice president of risk products, said Tuesday.
Trent Spurgeon, the vice president of consumer products at U.S. Bank, said QualiFile can provide valuable information about new customers.
"When we have a customer new to the bank that we have no previous experience with, it's difficult to know what account-level privileges to assign them until we know them better," he said. "This allows us to move that process up sooner."
Jeffrey C. Kastelic, a senior vice president of retail products for National City, said that its previous account-opening process was "a little bit behind the times in the up-front decision process." That process used New Account Chex, which looks at the same data as QualiFile but does not generate a risk score.
"We were declining far too many applicants, because we had a fairly simplistic decision model," Mr. Kastelic said.
Since it started using QualiFile in August, the Cleveland company has been able "to approve a lot more deposit accounts and new households than we were before," he said. "We've basically halved our decline rate, which is really a good improvement. We can now approve tens of thousands of more households than we did under the old model."
Many of the customers that National City can now accept previously had no bank accounts, or they had poor credit because they had bounced a check, but they have never been linked to fraud, Mr. Kastelic said.
Many of the new customers tend to have low balances, and they often prefer free checking accounts, he said.
Mr. Romain said that QualiFile also can help banks cross-sell products and services to customers "while they have their attention."
Though eFunds still offers New Account Chex, it has been trying to convert users to QualiFile.
U.S. Bank is installing the software for QualiFile now and expects to complete the rollout next year. Mr. Spurgeon agreed that the new service can help the Minneapolis bank generate additional sales leads, though he said that increasing cross-sales was not the bank's main reason for upgrading.
"If you know right away that a customer has a profile that looks like someone who may need a home equity loan, then having that information faster, sooner, and while the person is sitting across the desk from you is obviously an advantage," he said.
Mr. Kastelic said it is "a bit early to understand the cross-sell metrics we're going to get, but we believe it's going to be pretty strong."
Though QualiFile is more expensive than New Account Chex, the upgrade "is well, well worth it, from our business-modeling perspective, because of the vast improvements we've made in our acceptance rate," he said.
