OBJECTIVE: Move negative profit (D and E) households away from high cost channels such as Tellers and Call-center operators.  Offer a discounted loan rate as an incentive for signing up for e-Checking product (e-checking is typically defined as a free checking account that fees account holders for teller, operated-assisted, or drive-thru use).

In addition to being high cost checkers, many of these households are also weak in loan performance. Offering a discounted loan rate not only acts as a sign-up incentive for e-checking, but will improve overall profitability.

To fully analyze this, we look for 18 to 34 year-olds in D and E households that have a checking account and who use the teller five or more times each month.  The query is run at the Account level. (In this example, the institution only offers one type of account, minimum balance interest checking.)

The query returned 658 accounts in 629 households.  Next, a service summary report is run to find the actual loan usage for the matching households:

Out of 629 households, there are only 183 loans in total.  Of those, half are for used cars.  New car loans represent just 4% of the households.  As a group, these households are significantly under-utilizing loans.

IDEAS:  

• Create an e-checking product (a free checking account that charges fees -- usually $2 to $3 -- for teller, operated-assisted, or drive-thru use) if you don't already have one.

• Offer a new car loan at a discounted loan rate to those households that sign up for e-checking.  Be sure to include verbiage stating that only qualified applicants will be given the special rate and / or a loan.

• Offer a debt consolidation loan since this group may also have old credit card debt.

• For those who cannot qualify for a loan, you may wish to offer alternative incentives for signing up for e-checking.

CAVEATS: This is a high risk group so be sure to run a complete credit report before making any loans.  You may also wish to obtain a current credit risk score and perhaps a bankruptcy score too.

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