American Management Systems Inc. has launched software this week designed to predict a customer's disposition to pay back a delinquent loan.
According to Matthew Kuckuk, a senior principal at Arlington, Va.-based American Management Systems, the new Strata software uses behavior-scoring techniques to help collect bad loans.
Behavior scoring is a statistical tool that has been used extensively in the credit granting process, but its use in the collections area is relatively new.
En Route to Recoveries
Over the past three years, American Management Systems has built and installed behavior-scoring models for the collections departments at a number of money-center banks, including BankAmerica Corp.
Norcross, Ga.-based Stockholder Systems Inc. and a handful of other companies and consulting firms are also introducing scoring products designed to help banks with loan recovery.
Behavior-scoring models are created from credit application data, credit bureau files, payment records, and other pertinent information.
With Strata's scoring techniques, banks can classify accounts according to their likelihood of becoming seriously delinquent. Management action, such as dunning letters or phone calls, can then be directed to customers who are least likely to pay on their own.
"Time and money are saved because the system enables banks to tailor their actions to the actual account," Mr. Kuckuk said. "Some accounts should get phone calls immediately. On others, we might want to take a softer approach and delay activity.
"This way, a bank can be sensitive toward their better customers who, for some reason, may have ended up on a collections queue."
Strata uses a technique called "rapid strategy evolution" to test and track its performance as the scoring is actually taking place. This technique enables a banker to get a total picture of what the system is doing and then adjust his or her collections strategy, if necessary," Mr. Kuckuk explained.
In cases where a collector might have questions about an account or when additional information may be needed, Strata provides electronic access to credit bureau scores.
Strata is being introduced as a component of American Management Systems' Creditline collections systems running on International Business Machines Corp. mainframes and personal computers. Strata can also interface with most bank accounting systems. It will be available at the beginning of next year.