Maximize Value Across the Entire Customer Lifecycle
SUPERPOWERED RISK DECISIONING FOR
MAXIMIZE REVENUE, MINIMIZE RISK.
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MAXIMIZE ACTIVATIONS: THE POWER TO SAY YES MORE
You know the challenges in the telco industry, and even observers can see how fast the industry moves. So in this environment how do you manage fraud before a decision is made? How do you decrease your vulnerability to account defaults? And… reduce the risk for subscriber churn, even in an increasingly competitive market? You need decisioning superpowers. But, you don’t have to go it alone to find these powers… Do you have a partner that can empower you to do all of the above and continue to execute on daily business goals? Did you know the right partner can decrease credit losses by up to 40% 1 . So why are most telcos still constrained by legacy solutions? Though the industry has made efforts to modernize, incorporating advanced decisioning solutions into existing systems is still a challenge, exposing companies to revenue risk. Choosing the right decisioning solution will unlock your power to: • Maximize activations without increasing risk • Reduce losses with better fraud detection and prevention • Minimize churn to optimize customer lifetime value (CLV) Transform your risk decisioning and strike the perfect balance between revenue and risk across the entire subscriber lifecycle.
One click. Done. That’s the experience your subscribers crave when it comes to signing up for a new service. Much like any other service, they expect an easy, fast, and fully digital onboarding service. But quick and easy can often feel counterintuitive to maintaining a robust risk management strategy. To maximize activations, you have to walk a fine line between streamlining the onboarding and activation of new subscribers and maintaining your risk parameters. When creating subscriber-winning onboarding processes that maximize activations, there are two major areas of opportunity: • Actioning fraud risks faster • Expanding your lendable market SPOTTING FRAUD Comic villains used to be easy to recognize with their simple disguises. Today, they’ve gotten better at hiding, using complex tactics that take special skill to uncover. The same is true of telco fraudsters, many of whom have become geniuses when it comes to finding new victims. Fraud costs telcos an estimated $40 billion each year 2 . The industry has seen an increase in fraud - up 28%
from 2019 to 2021 3 - and with it, an increasing number of tactics employed by fraud rings, including synthetic ID fraud, subscription fraud, credit card fraud, and chargeback fraud. One study estimates that more than 200 types of telecom fraud exist 2 . But how do you catch fraudsters without hindering your activation growth goals? With a legacy decision engine, your process may be limited to basic fraud checks, leaving you to only automatically approve low- risk profiles who you can be sure are real. More complex cases are handled manually, which slows down approvals and can give your activation numbers a significant hit - half of fraud professionals in a recent survey said that more than 50% of applications were abandoned due to a review process that was too long 4 . To recapture those lost applications, invest in technology that can: • Run complex KYC and fraud checks as part of your decisioning processes • Increase the speed of checks to offer real-time decisions • Use alternative data to create more robust views of risk
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Get the Data Superpower: X-Ray Vision
EXPAND YOUR LENDABLE MARKET
credit scores alone! So, what’s the alternative?
To engage the low-risk population of this potential market for both wireless service and handset financing you need to expand beyond the traditional credit score as an indicator of creditworthiness. Instead, integrate alternative data sources into your decisioning processes to look at alternative indicators of credit risk such as utility and rent bills, spending habits, and employment history. When combined with AI/ML capabilities this aggregation of data types can empower you to confidently assess risk of those who may be credit invisible or thin-filed. To enter the unbanked/thin-filed markets and activate low-risk subscribers, choose solutions that can: • Access alternative data sources • Analyze alternative data with predictive machine learning models to create risk scores • Action the alternative data to make instant decisions
A traditional approach to decisioning relies on using credit scores as the primary method of determining creditworthiness. Why? Because it’s reliable, the processes are already in place, and legacy technology can make it a challenge to try anything new! Let’s get one thing straight: credit scores are an effective predictor of risk. But when it comes to expanding your lendable market, using only credit scores means you often end up filtering out the low-risk applicants that could be a valuable subscriber. There are millions of unbanked and thin-file customers across the globe that usually include new to credit, immigrants, and other underserved communities. In the US, there are nearly 50 million credit invisibles 5 who do not have access to handsets or mobile service or mobile service, and north of the borther 15% of Canadians are classed as underbanked 6 . In Latin America, where cash is still the preferred payment method, 70% of adults are unbanked or underbanked. Globally, over 1 billion people have no credit history - that’s almost ¼ of the world who wouldn’t be approved by
Having the right data at your fingertips is like having x-ray vision: you can see deep beneath the surface to discover what others can’t. From the first point of contact, data unlocks insights into a potential subscriber’s risk and authenticity. The more data points your technology can gather, the easier it is to verify legitimate applications and flag bad actors.
The same goes for engaging the unbanked - new sources of data allow telcos to create scorecards from alternative credit signals. Use x-ray vision to look at data like: • Social media presence: it’s a red flag if social accounts are new, don’t exist, or don’t have activity • Rent payment history: if the applicant has paid on time consistently, it could indicate creditworthiness
MINIMIZE LOSSES – DEVELOP A SIXTH SENSE FOR BAD DEBT
Predicting danger is a superpower most of us would love to have. Wouldn’t it be great if your risk management team could sense payment delinquency before it occurs? Bad debt can leech up to 2% of your revenue 7 . While that may seem like a drop in the bucket, for a company like Deutsche Telekom, which produced over $80 billion in 2020 8 , 2% is over $1.5 billion lost. Even with so much at stake, many traditional risk management models only monitor payment status. If a subscriber’s creditworthiness changes in between billing cycles, you don’t get alerted until after they miss a payment.
So, what’s the alternative? Along with using robust credit risk analysis at onboarding, as mentioned above, risk monitoring should continue across the full customer lifecycle. Implementing early warning signs gives you that sixth sense urging you to take action and reduce credit exposure and defaults. There are two highly effective tactics that will optimize your proactive risk management strategy: • Incorporating behavioral data and insights into your models • Regularly monitoring account health regardless of payment status
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BOOST CUSTOMER LIFETIME VALUE - SUBSCRIBERS, ASSEMBLE!
ANALYZE BEHAVIOR BEFORE THE POINT OF NO RETURN Humans are creatures of habit. We have patterns we like to stick to, and the better you know someone, the more patterns you pick up on. That’s why superheroes always seem to know what their rival is going to do next or where they’ll be - they know how they operate.
Instead of managing delinquency risk by analyzing known patterns that offer early warning signals for default risk, a more typical approach is a reactive one, focusing on subscribers who have already missed payments 9 . However, this reactive approach doesn’t kick in until your business suffers losses.
Telcos, like most businesses, rely on popularity to operate. Unfortunately, many telcos have a retention problem— around three-quarters of new wireless subscribers are coming from a different provider 10 , often because of factors like negative customer experience and intense industry competition. Between the abandoned revenue and high acquisition costs that can hit over $500 per subscriber 11 , maintaining current churn rates is an outcome that will hit your revenue numbers hard. So, what can you do if, like most telcos, you suffer from high churn rates?
Develop industry leading retention strategies. When weighing retention strategies, you have a unique opportunity to increase the lifetime customer value of your portfolio, not only through longer relationships with subscribers, but by optimizing and personalizing plans, products, and financing options. For the most impactful subscriber retention plan, include the following elements: • Data-driven analytics to optimize pricing, upsells, and cross-sells • More personalization to improve the customer experience
Use Your Data Superpowers for Behavioral Insights
One opportunity for improvement is to take advantage of behavioral scoring that alerts you to early warning signs of risk and in turn triggers pre-delinquency processes to help minimize losses. This can be powered through in-depth behavioral analysis, which provides deeper insights into the financial health of a subscriber than payment history alone, and helps you evaluate the most effective intervention process you can take to minimize losses. Collect behavioral data from onboarding through the duration of the customer lifecycle and analyze it to watch accounts more likely to default. Revealing behavioral data might include:
• Purchase patterns: using RFM analysis, note the recency, frequency, and monetary spend of purchases to assess risk - has it changed? • Geolocation: if a subscriber once lived in a downtown high rise, but has downsized in the suburbs, it could indicate financial hardship The best behavioral insights to flag potential future defaults come from systems that can: • Pull data from a wide breadth of sources for more accurate assessment • Provide flexible risk modeling that is easily adjustable • Synthesize behavioral data to derive credit signals
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STAKE YOUR CLAIM: IMPROVING COMPETITIVE ADVANTAGE Telcos know that too much market saturation is bad for business. But telcos don’t have the superhero option to stake their claim on a certain territory, making competition fierce. It’s never been easier to shop around for the best deal, especially with multi-year- long contracts falling by the wayside, mobile number portability (MNP) that allows you to keep your number when switching networks, and providers willing to undercut each other to gain business. This translates to churn rates of up to 67% for some telcos 10 .
YOUR CUSTOMER EXPERIENCE SUPERPOWER: PERSONALIZATION McKinsey found that companies which excel at personalization, driven by data analytics, generate 40% more revenue than those that don’t. Yet only 5% of telcos are using analytics to its full potential to power personalization and in onboarding and continue through the full lifecycle, from determining pricing and finance eligibility at application, to determining Next Best Offer (NBO) for cross-sells and upsells. But why would you use a decisioning engine to power personalization? Your decisioning solution integrates with an immense amount of data sources and uses advanced analytics such as AI and ML to optimize decisions for a wide range of use cases such as fraud, KYC, credit risk, offer eligibility, and more. With its ability to access, analyze, and action data in real-time it can ensure you respond to NBO triggers in real time. turn competitive advantage. Personalization should start at
On top of that, people are upgrading handsets at increasingly slower rates 12 , and unlimited mobile and internet access doesn’t leave much room for service expansion. Despite this, almost 33% of wireless shoppers sign up for telco service to get the latest handset 13 . Offering the most competitive service rates and financing options is the key to keeping your customers by your side. Optimize easily for a competitive advantage using solutions that can: • Mine data to determine optimal pricing for each subscriber segment • Learn as it decisions with AI to stay competitive • Pre-approve upsell and cross- sell opportunities for qualified subscribers
Meet customers where they are with personalized, retention-promoting offers, using software that can: • Make real-time decisions for improved customer experience • Perform data-driven analyses to identify Customer Lifetime Value- maximizing opportunities • Produce customized offers to subscribers based on activity and usage
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Get the Hyper-Personalization Superpower: Advanced Decisioning
SUPERCHARGE YOUR DECISIONING: SEE INTO THE FUTURE WITH ARTIFICIAL
Look for AI/ML solutions that offer: • Auto-optimization: automatically detect drift and let users know to retrain models, ensuring continuous improvement in model accuracy • Champion/Challenger testing: pit two models against one another to identify the most accurate option and then deploy quickly with autoML • Pre-approvals: pre-approve qualified subscriber segments for enticing cross-sell and upsell opportunities, so you don’t have to wait for subscribers to come to you asking for faster internet, more wireless data, or a handset upgrade
INTELLIGENCE AND MACHINE LEARNING
Advanced, automated decisioning technologies can give you the power of super speed: processes that were once manual now happen in a fraction of the time. And faster processes improve the overall experience of your customers. An advanced platform can offer you: • Real-time decisions: go from activation to onboarding in real- time with automated processes that can make decisions in milliseconds • Flexible control: if you use tech that is low-code/no-code, you can adjust processes without relying on vendors to reflect changes in the market, business goals, or evolving regulations while keeping the experience seamless for your subscribers • Improved accuracy: easily launch and test decisioning workflows to optimize accuracy across the entire lifecycle • Automatic offers: automations can push the personalized offers to qualified subscribers the instant they qualify, letting telcos bypass lengthy batch decisioning processes
The right decisioning tech can also help you identify opportunities to improve CLV - operators that personalize services generate 40% more revenue than those that don’t 14 . Accurately determining the likelihood of payment default at the activation stage is also a critical moment for telco operators. One wrong assessment can cost thousands of dollars, on top of the hundreds already spent on acquisition. Two crucial areas next-level decisioning software should consistently perform include: • Automated decisioning: powerful automation can push applications straight through compliance, KYC, predictive modeling and pricing processes, making it easier and faster to identify potential fraud and defaults, as well as new subscriber bases • Scaling operations: decisioning can help increase subscriber volume, but it must be able to scale alongside a business while maintaining the accuracy of the increased volume of decisions
Life sure would be a lot easier if we had the power to see the future. We’d know the winning lottery numbers ahead of the draw and be able to avoid the traffic jam on the way to work. Advanced analytics like artificial intelligence and machine learning (AI/ML) provide that foresight: you can make accurate predictions about tomorrow that help you take the best course of action today, and integrating AI/ML into your decisioning processes can increase efficiency by up to 40% 14 . AI/ML makes it easy for you to proactively manage your portfolios by seeing patterns in your data that traditional decisioning can miss. It also enables you to improve the customer experience, with the ability to customize offers for current subscribers to improve retention, and it continually improves accuracy by learning with each decision it makes.
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EXTREME AGILITY: BUILDING YOUR TELCO SUPERPOWERS
Bonus Power: Use Data as it’s Never Been Used Before
ACTIVATING YOUR SUPERPOWERS Unlike well, every superpower,
It’s not easy being a telco: you have to overcome substantial barriers throughout the subscriber lifecycle, and without the right tech at your disposal, it can be hard to address them. But why only address obstacles when you can eliminate them? A unified decisioning solution gives you the superpowers you need to level the playing field using three key, complementary components: • An extensive data ecosystem that lets you access and integrate both traditional and alternative data • AI and machine learning that maximizes your decisioning decisioning that improves the speed and accuracy of your credit decisions Together, they form a superpower that makes it easy to capture low-risk, high profitability opportunities. performance and powers continuous improvement • Advanced, user-friendly
Should we mention data again? Yes, because it also enables you to deliver personalized customer experience to your subscribers, reducing churn while increasing the customer lifetime value.Tailor-made offers originate with data like: • Clean customer data: integrating normalized subscriber data into your models provides insight into entirely new segments and can even help optimize pricing • Wireless usage: how someone uses their device can speak volumes about what services and products they’re actually interested in, along with their readiness to transact, helping to illuminate optimal cross-sell and upsell opportunities
Automated decisioning processes allow you to take the manual intervention and guesswork out of your decisions, with the ability to integrate a variety of data sources more easily. Look for solutions that: • Offer the ability to rapidly integrate new data sources and provide drag-and-drop functionality to easily modify existing workflows • Provide visual testing and analytics so you can rapidly build, deploy, test, and iterate your workflows
decisioning superpowers are available to everyone. All you need to transform your telco is a unified decisioning platform that can access robust data and use machine learning to optimize decisions. Assess identity, fraud and credit risks in an instant. Intuitive low-code/no-code UI puts control in your hands and automations deploy on their own to knock down any barrier that comes your way: maximize activations without sacrificing risk or fraud protections, reduce loss to defaults and collections, and minimize churn while increasing the lifetime value of your customers. You no longer have to decide between risk and reward - let a unified decisioning engine take on the risk, while you reap the reward.
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DEPLOY IN AS LITTLE AS THREE MONTHS WITH PROVENIR Provenir’s industry-leading AI-Powered Decisioning Platform is data fueled and AI driven for smarter risk decisioning. The solution, managed through a single UI, empowers organizations to innovate further and faster than ever before, driving the continuous optimization you need to power growth and agility, without increasing risk. With the unique combination of universal access to data through the Provenir Marketplace, simplified AI and world-class decisioning technology, Provenir provides a cohesive risk ecosystem to enable smarter decisions across the entire customer lifecycle – offering diverse data for deeper insights, auto-optimized decisions, and a continuous feedback loop for constant improvement.
ENDNOTES
1.
Designing Next-Generation Credit- Decisioning Models, McKinsey & Company
8. Telecommunication Operators/
Companies Worldwide by Revenue in 2020, Statista
2. Data Synthesis in Fraud Detection and Prevention for Telecommunications Service Providers, Deloitte 3. Telecom Fraud on the rise: 2021 CFCA Global Telecommunications Fraud Loss Survey, Subex 4. The Pros and Cons of Manual Fraud Reviews, Experian 5. Financial Inclusion and Access to Credit, Experian 6. 15 Percent of Canadians are Underbanked 7. From Default to Debt: Stemming the Flow with Bad Debt Analytics, Subex
9. Telecom Credit Management - Busting the Myths, Subex 10. Churn Reduction in the Telecom Industry, Database Marketing Institute, DB Marketing 11. Big Telecoms are Spending More
Cash to Keep Customers, But Some Tactics Raise Concerns, Financial Post
12. Smartphone Users Are Waiting
Activate the Ultimate Superpower!
Longer Before Upgrading — Here’s Why, CNBC
13. Winning the Wireless Shopping Moments That Matter, Google 14. Unlocking the Value of Personalization at Scale for Operators, McKinsey & Company
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