New service leverages Fair, Isaac models and Experian credit data The latest net to be cast into the small business pool is a credit scoring system designed to maximize direct marketing campaigns aimed at reeling in new customers. Venture, a small business risk scoring service that combines Fair, Isaac & Co.'s scoring models with Experian's consumer and business credit information, can assign credit scores to batches of existing customers or disseminate lists of potential customers within the scoring criteria.
Fair, Isaac touts the product as an important tool for financial institutions to understand their present customers, as an aid in cross-selling and as a strategic means of accurately pegging the needs of potential customers. Customer profiling allows for statistically accurate risk calculations and better risk-based pricing, says Fair, Isaac's Sharon O'Connor-Clarke, commercial markets manager.
With Venture, a bank can provide a list of potential small business customers to Fair, Isaac, which then scores each customer using Experian's credit data. Alternatively, banks can request a mailing list of potential small business customers that have been pre-scored by Fair, Isaac. Pricing for Venture is based on the number of scores or names provided to the bank.
Products like Venture can help banks compete against nonbanks that are likely to have access to a wealth of direct market information. BankBoston is planning to use Venture for its first pre-approved direct mail campaign to small business customers. "There is nothing else out there now that we've got confidence in," says BankBoston's Ken Mueller, vp of small business banking. "A number of our competitors are doing it. It's something that we've got to fend off." Because banks are increasingly relying on direct marketing as a way to reach potential small business customers, Venture could potentially add efficiency to the process by increasing the approval rate for targeted customers. "The key to this is that one of the traditional problems in making small business loans is that they're very expensive," says Bob Kottler, svp of Hibernia National Bank in New Orleans. "The farther down we can drive the cost of direct marketing, the more effectively we can use itoespecially on the lower end of the segment."--sausner tfn.com.