Debt Management Strategy

 
Client situation

• A major UK provider of Secured Loans was experiencing significant impairment charges owing to high-level of write-offs
• The client commissioned Capco to undertake a review of its Arrears Management strategy to identify improvement opportunities across pre- and early stage collections

Approach

Conducted benchmark diagnostic to establish key areas of focus:

• Collections effectiveness: Quick-wins identified and implemented across cycle 1 collections
• Segmentation strategy: Development of strategy for “High Value High Risk”
• Pre-delinquency management (PDM): Revised selection criteria defined and enhanced PDM scripting developed and implemented.

Key benefits

• Segmentation: Clear strategy developed for the treatment of “High Value, High Risk” customers
• Cycle 1 collections: Right Party Contacts increased, payments taken and promises kept ratios increased
• PDM: Effectiveness of the current PDM contact strategy improved

Deliverables

• Detailed analysis of collection processes, calls structures, training and telephony for cycle 1 arrears
• Implemented Quick wins for cycle 1 arrears and medium to long term improvements agreed
• Full strategy covering all cycles of delinquency for “High Value, High Risk” customers
• New selection criteria, scripts and automation designed and delivered for pre-delinquency management capability
   

Product Strategy for a set of Revolving Credit Cards (RCC)

Client situation

The client would like to re-launch its revolving credit card (RCC) business for the German market. A comprehensive market study had been conducted to understand the critical success factors for RCC products and established competitors in the market. This intelligence has provided a basis for the product design of the new RCC products suite (specs, characteristics, etc). Furthermore, a business case (cost framework for the organization to establish, operate and maintain the GRCC product) had to be developed as basis for a management decision paper.

Approach

• Analysis of German / European revolving credit card (RCC) market in terms of players, products, critical success factors, hurdles, etc
• Facilitation of development for a new RCC product (specifications, characteristics, strategic positioning options, target segmentation, etc)
• Development of a RCC business case model to calculate income and cost for the new envisaged suite of cards including:
  • Construction of an income model based on relevant income drivers such as  interest earning, annual card fees, merchant service charges, interchange fees, value-added insurances, etc.
  • Definition of the cost base for new RCC business to include set-up, operations, maintenance, marketing, etc.
  • Development of decision document for the overall RCC initiative

Key benefits

• Established a comprehensive and detailed comparison of all relevant German RCC products and its issuers
• Established a bottom-up business case model with income, cost and underlying quantity structure (customer targets, financial assumptions, etc)
• Developed a broad understanding of the critical success factors and hurdles to succeed in the German RCC business
   

ATM Channel Strategy 

Client situation

The client had suffered a declining financial performance across the ATM channel over recent years owing to a lack of product and channel cohesion. Various tactical initiatives had been taken to improve channel performance but these were not structured within an overall distribution channel strategy. The client commissioned a review of future strategic options in order to determine clear business priorities and provide an overall strategic direction for the channel.

Approach

• Current state assessment of the ATM channel spanning: estate management, business profitability, customer disloyalty, functionality, maintenance and cost reduction.
• Review of cost allocation and treatment across the ATM channel including reconciliation process between channel and individual ATM level P&Ls.
• Financial modelling of identified business scenarios to determine high-level revenue potential and identify priorities for next stage analysis and business case development.

Key benefits

• Identified clear priorities and business opportunities to deliver improved financial performance across the channel in the medium-term.
• Promoted strategic debate within the client organisation on future cost and revenue model to be adopted and cross-product/channel synergies to be capitalised.

Wealth Management Transformation

Client situation 

The wealth management division of a major UK bank had recently merged two distinct salesforces in a new strategic market offer, but had not yet merged the two operating models. The client commissioned a review of the current and potential future states in order to develop a transformation roadmap to a new operating model.

Approach 

• Current state assessment of the operation, including value chains, process and architecture maps and functional model and identifying key issues
• Structured interviews with key stakeholders to understand key and define design criteria drivers
• Develop future design based on design criteria, identifying and validating key decisions for stakeholders
• Develop future state customer interactions to define high level process and system requirements
• Develop transformation roadmap, mapping future states to projects and initiatives, and defining high level costs and benefits

Key benefits

• The approach undertaken provided the client with a clear transformation roadmap to a future state model across defined transition phases