Volkswagen Financial Services (VWFS) is a leader in the auto finance sector and the reference company for those who choose Volkswagen Group vehicles.
The needs of Volkswagen Financial Services
“Debt collection in VWFS is the responsibility of the Risk Department together with the Risk Management and Remarketing Office; it manages an average portfolio of 7,000 credit lines and 27 million euro. Faced with such a workload and a 25% increase in insolvencies following the 2009 financial crisis, we needed to reorganize the entire debt collection system”, explained Ester Binda, Collection Manager at Volkswagen Financial Services.
“To reach this objective we had to move from segmentation based solely on days of delay and/or overdue installments (aging) to more comprehensive segmentation based on 'external information', enabling us to check customer behavior within the entire credit system in real-time. Furthermore, there was a need to initiate targeted actions to contain transition into higher risk classes, as well as reduce the costs of action; without forgetting up-selling strategies, offering customers a reduction in the installment amount in order to retain the relationship”.
“Debt collection in VWFS is the responsibility of the Risk Department together with the Risk Management and Remarketing Office; it manages an average portfolio of 7,000 credit lines and 27 million euro. Faced with such a workload and a 25% increase in insolvencies following the 2009 financial crisis, we needed to reorganize the entire debt collection system”, explained Ester Binda, Collection Manager at Volkswagen Financial Services.
“To reach this objective we had to move from segmentation based solely on days of delay and/or overdue installments (aging) to more comprehensive segmentation based on 'external information', enabling us to check customer behavior within the entire credit system in real-time. Furthermore, there was a need to initiate targeted actions to contain transition into higher risk classes, as well as reduce the costs of action; without forgetting up-selling strategies, offering customers a reduction in the installment amount in order to retain the relationship”.
The project with CRIF
“In light of these requirements, back in 2010 we initiated a project with CRIF to reorganize our collection strategies”, continued Ester Binda. “The first step was to use 'external data', or in other words data coming from the CRIF Information Core, the CRIF Group information assets, which includes public information and credit information. Subsequently, CRIF analytics were introduced”.
“The CRIF Information Core comprises the CRIF Group information assets”, continued Maria Ricucci, “built up from over 40 different sources, 70% of which are proprietary. It is, in fact, the largest set of information used by the credit industry, unique in Italy.
“The use of internal information and CRIF Information Core data”, concluded Ester Binda, “has allowed us to distinguish between 'self-cure' customers who automatically become current, and 'early out' customers that require specific collection actions such as written reminders, phone collection, etc. Finally, following the actions taken, monitoring and reporting of the results are initiated”.
“Specifically, three scoring models were developed: early collection for natural persons, early collection for companies with one or two overdue installments, and late collection for customers with more then three overdue installments. Thanks to the use of statistical models, collectors now receive 'comprehensive and advanced' profiles of the customers undergoing collection, based on payment behavior from internal data and behavior of the customer in relation to the credit market.”, added Alessandro Bonaita, Collection Supervisor.
Key benefits
“To sum up, we achieved higher efficiency, quicker assignment of early collection cases to external agencies and the staffing levels stayed the same despite a 25% increase in workload. The collection rate has increased and is now over 90%. Furthermore, customers who were offered a reduction in installment amount stayed performing in 75% of cases five years on, securing the portfolio and retaining the customers.”, concluded Alessandro Bonaita.
For more information, contact: marketing@crif.com
“To sum up, we achieved higher efficiency, quicker assignment of early collection cases to external agencies and the staffing levels stayed the same despite a 25% increase in workload. The collection rate has increased and is now over 90%. Furthermore, customers who were offered a reduction in installment amount stayed performing in 75% of cases five years on, securing the portfolio and retaining the customers.”, concluded Alessandro Bonaita.
For more information, contact: marketing@crif.com
