Learning from the customer interviews: user selection in unsecured consumer lending.

In this article, we explore the insights gained from a series of customer interviews conducted with representatives from various financial institutions and fintech companies.

Our goal was to understand the key priorities and challenges these industry professionals face in their day-to-day operations, particularly in the areas of customer onboarding, risk management, cost optimization, and user experience.

Through the responses, we have identified several recurring themes that underscore the importance of automation, striking the right balance between risk and cost, effective data utilization and integration, performance monitoring, and customer journey evaluation.

By recognising these critical aspects, article aims to provide valuable insights for industry stakeholders and decision-makers, helping them navigate the landscape of online financial services and make informed, data-driven decisions to enhance their business strategies and customer experience.

Bellow is the list of the questions that we presented to the interviewees:

1. Is it important to identify customer quality early in the process?
2. Is inclusion more important than savings on credit scoring?
3. Is it important to get feedback on UI interaction of the customer segment that is defined by business as a target (in other words these are desired users)?
4. What is more important is customer prescreening or early default detection.
5. Do you want to see collected data (or its aggregations) and classification predictions in the dashboard?
6. Do you consider customer retention as an important topic?

All respondents emphasized the importance of identifying customer quality early in the onboarding process. They cited various reasons for this, including:

1. Controlling the cost of customer acquisition and onboarding: By identifying quality customers early, companies can save money and focus their efforts on those with a higher likelihood of repayment.
2. Ability to onboard new customer segments: Early identification of customer quality helps companies serve new segments, such as those new to credit or those who might be missed by traditional scoring methods.
3. Data-rich markets and external data sources: In data-rich markets, early identification of customer quality allows companies to potentially save money on external data sources.
4. Automation and efficiency: Some respondents pointed out that achieving full automation of the customer evaluation process is essential for addressing the demand for installment services at the point of sale.
5. Growth and conversion: The importance of early customer quality identification is also tied to the potential for growth by attracting new segments and improving conversion rates.

Respondents had mixed views on the priority between inclusion and savings on credit scoring. Some pointed out that developed markets might prioritize cost savings and engagement, while emerging markets would focus on targeting new segments and evaluating thin-file cases. Others mentioned that during challenging economic times, cost savings may be a higher priority, but growth opportunities would still be pursued if identified.

Respondents generally agreed on the importance of feedback on UI interaction. They noted that a smooth user experience is vital for retaining customers and reducing drop-offs during the onboarding process. Some respondents mentioned using tools like Google Analytics and Hotjar to gain insights, while others expressed interest in learning more about drop rates and potential improvements.

The importance of customer prescreening and early default detection varied among respondents. Some mentioned that early rejection and cost savings were more important, while others focused on fraud detection and reducing risks. In general, the priority between these factors seemed to depend on the company’s current challenges and market conditions.

Respondents had mixed opinions on the importance of dashboards for displaying collected data and classification predictions. Some mentioned that dashboards were crucial for visibility and performance monitoring, while others felt that API integration was sufficient and that they would import data into their own systems. The desire for explanation behind decisions, rather than just probability, was also mentioned.

Respondents unanimously agreed on the importance of customer retention. They noted that profitability is significantly impacted by retaining customers, and customer retention is a high priority in their organizations. Some respondents shared their key performance indicators (KPIs) related to customer retention, such as repayment rates, client lifetime value (CLV), and conversion volume.

Based on the responses, the following additional topics appear to be important to the interviewees:

1. Automation: Several respondents emphasized the importance of achieving full automation in the customer evaluation process. They mentioned the need for reducing manual labor, speeding up the process, and addressing the need for installment services at the point of sale.
2. Balance between risk and cost: Finding the right balance between risk management and cost reduction was a recurring theme. Respondents expressed the need to optimize their data collection and decision-making processes to identify and onboard the right customers while minimizing expenses.
3. Data utilization and integration: Respondents mentioned the value of using unstructured or new types of information for decision making and integrating data from various sources. They also discussed the potential benefits of alternative data sources and working with partners to improve data quality and approval rates.
4. Performance monitoring and KPIs: Respondents shared a range of key performance indicators (KPIs) used to track and measure their company’s performance. They emphasized the importance of closely monitoring these KPIs and making data-driven decisions to optimize their processes.
5. Customer journey evaluation: Some respondents mentioned the need for an integrated customer journey evaluation framework to track data and measure performance throughout the customer lifecycle, from acquisition to retention. They also expressed interest in deeper analytics on UI and customer journey to improve their marketing efforts and customer experience.

To quantify the differences and similarities among the actual responses of the survey, we can use a scoring system based on the common themes discussed by the customers. A score of 1 indicates strong agreement on a theme, while a score of 0 indicates no agreement. Here is a breakdown of the scores:

1. Identifying customer quality early in the process: Agreement score: 1
   All customers highlight the importance of identifying customer quality early in the process for various reasons such as controlling costs, automating evaluation, and onboarding.
2. Inclusion vs. savings on credit scoring: Agreement score: 0.5
   Customers differ in their priorities depending on the market. Developed markets prioritize cost savings, while emerging markets focus on inclusion.
3. Feedback on UI interaction: Agreement score: 1
   All customers emphasize the importance of understanding user behavior and receiving feedback on UI interaction to improve onboarding processes and user experience.
4. Customer prescreening vs. early default detection: Agreement score: 0.5
   Customer responses indicate that the importance of prescreening or early default detection varies depending on the company’s objectives and market.
5. Dashboards and data visualization: Agreement score: 0.5
   Customer responses show mixed opinions on the importance of dashboards. Some find it important for visibility and performance metrics, while others don’t consider it a top priority.
6. Customer retention: Agreement score: 1
   All customers identify customer retention as an important topic, with a focus on profitability and client lifetime value.

Overall agreement score: (1 + 0.5 + 1 + 0.5 + 0.5 + 1) / 6 = 0.75

The overall agreement score of 0.75 indicates a fairly strong agreement among customers on the themes and concerns raised. However, there are some differences in priorities and emphasis, mainly in the areas of inclusion vs. savings on credit scoring, customer prescreening vs. early default detection, and the importance of dashboards and data visualization.

In conclusion, the customer interviews reveal the importance of early customer identification, balancing inclusion and credit scoring savings, enhancing user experience, and implementing effective pre-screening and early default detection. By addressing these priorities, financial service providers can optimize their processes and maintain a competitive edge in an evolving market landscape.