Card Declined: Credit Limit Too Low

Card Declined: Credit Limit Too Low

When a credit card purchase is declined because of the credit limit, do you switch to another card or just skip the purchase? One casual action by a consumer can cost the bank not only that transaction but possibly the customer as well. To solve this pain point, Cathay United Bank now proactively sends a text message: without calling customer service, you press one key, your limit is raised immediately, and you can complete the purchase.

Liang Ming-chiao, assistant vice president of Cathay Financial Holdings' Digital and Data Development Center (the DDD Center), says banks used to manage customer relationships through traditional branches. Now more and more customers come through digital channels such as computers and phones. "Customer behavior is changing. Banks must keep up with how customers want to be served, or they will be eliminated!"

Design the scenario first, then optimize the process. The key is to satisfy digital-channel customers "immediately," and the real-time decision management system (RTDM) developed in-house by the DDD Center is Cathay Financial's solution. Liang explains that "real time" refers to timing: interacting with customers at the right moment not only raises their satisfaction with and loyalty to the brand, but also lets the bank collect data through these interactions to fully understand customer needs.

Besides researching new technologies, the data team of nearly 80 people focuses on business analytics with each business unit. "A model is useless if it can't be put into commercial use," Liang says. So they designed various interaction scenarios, starting with credit card data. They found that Cathay United Bank customers abandon card purchases worth over NT$100 million a year because their limits are too low. In the past, calling customer service meant waiting at least tens of minutes for a limit increase, so the moment to use the card was lost. "That money was as good as ours. Now we are only recovering transactions that were interrupted," Liang adds.

"The hardest part was that we couldn't affect existing transactions," Liang says. For temporary limit increases, the real-time decision system has to connect with the bank's transaction system while simplifying the user's steps, and a system crash would cost more than it gained. So the team ran many stress tests and launched only after confirming that traffic would not spike out of control. The project took eight to ten months and involved more than 100 people from the data, credit card, and risk review teams. The results were striking: this seemingly simple change raised the bank's average spend per card transaction by 60% over the pre-launch level, far beyond the team's expectations.

"Data analytics is our foundation," says Sun Chih-te, senior executive vice president of Cathay Financial Holdings. The data team could even be called Cathay Financial's engine: its smart investment platform and chatbot are both products born from data. Although the industry sees Cathay Financial as a leader in data analytics, the company rates itself only 3 out of 10. The challenge ahead is to embed a data culture across the group, so that everything from product design to process improvement is driven by data.