Card application evaluation by banks

Photo by Sharon McCutcheon on Unsplash

In last article we covered different channels for acquiring card customers. Once the customer applies for credit through any of the channels, there are lot of considerations banks need to make to evaluate and approve credit. In this article we will try to cover all those aspects related to card application processing.

1. Ensuring the application is complete : The first and foremost check is to see if application is complete. Every country has specific customer identification regulations that needs to be fulfilled. These details are also needed to pull bureau as well as contact customer for further details. Some of the important details are :-

• Full Name
• Complete address (street, city and postal codes)
• Phone numbers
• Date of birth
• National/Tax identification numbers (SSN in US , PAN/Aadhar in India etc.)
• Income and source
• Consent to pull bureau and share data with affiliates/bureau(electronic or signature)

Any of the missing details above will force banks to either contact customer to rectify it or cancel the application

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2. Ensuring application is not duplicate or of existing cardholder : Most banks only allow 1 product per customer. Also some customers may apply multiple times in a short time frame. Banks have controls in place to ensure they are not pulling bureau or processing apps multiple timeframe

3. Bureau/alternate data pull : Most of countries now have established bureau’s with long credit histories. Banks may use customer info to match with bureau and pull credit history to either score them for credit or use bureau attributes for screening them for credit. Apps that don’t get a bureau match are also know as unbanked , and may be processed differently using alternate data (repayment history on utilities, social media profile data etc. ) or may not be approved depending upon Bank’s credit policy.

4. Decision engine : Most of the applications are processed by software's using set of rules coded into bank’s credit processing systems. Majority of apps are decision real time provided steps 1,2 and 3 above are complete. The outcome of this step could be either account getting approved, declined or getting referred for manual review for many reasons. There could be more outcomes depending upon product and bank policy like multiple product choices, counter offers etc. These system will also trigger downstream systems to work on outcome e.g. send plastic for approved, send letters to declines and queue referrals to operations

Decision engine is most critical part in application process and banks use multiple technology products and statistical techniques, along with business justification to evaluate and process the applications.

5. Operations and IT infrastructure: As mentioned above these teams manually review and underwrite any referrals which could be due to multiple reasons like suspect fraud verification, high credit line requirement etc. They may also ensure that all systems and processes are working fine and may handle customer complaints. IT infrastructure teams ensure the system works smoothly, make sure that different systems interact smoothly and do enhancements as per business needs.

We will cover decision engine evaluation for acquisition in next few articles before moving to existing customer management.

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