Financially fragile loan holder prevention program

A new program to anticipate loan holders’ budget problems before their financial situations become too difficult, offering them helpful advice, as well as effective solutions.

Innovation presentation

BNP PARIBAS Personal Finance France (PF) recently launched a new program targeting, among its customers, those that could be financially fragile in spite of the fact that they had been repaying their loans on time. The identification is made by PF through a specific score or following contacts initiated by customers themselves.

The main objective is to anticipate loan holders’ budget problems before their financial situations become too difficult, offering them helpful advice, as well as effective solutions.

For customers in difficulty having multiple loans with several lenders, PF also set up a partnership with Cresus (a French association dedicated to over indebtedness prevention and assistance). Cresus acts as an intermediary for all the creditors involved, and provides training in budgeting skills.

Over indebtedness is a situation that concerns more than 200,000 French households. In 3 cases out of 4, it is related to life events such as job-loss, divorce, illness or death. PF is committed to responsible lending with a simple yet challenging vision: improving loan accessibility while proactively fighting indebtedness.

Many departments participated in this project, among them, Marketing, Sales, Legal, IT, Institutional Relations, Compliance. After an extensive pilot test phase, the program was launched in July 2012.

50% of the customers identified as potentially in a difficult financial situation are indeed vulnerable. Out of these 50%, 8 out of 10 accept one of the solutions offered by PF (90% of the cases are solved directly by PF, and 10% are transferred to Cresus).

Uniqueness of the project

PF approach is disruptive and consists in 3 main innovations:

- The preventive nature of this scheme

- The score developed to identify customers who could potentially find themselves in a difficult financial situation, before they even default on their loan repayments. The algorithm is based on data such as changes in the customer’s personal situation, and his credit usage

- A targeted offer: a dedicated team of specifically trained professionals providing long term budgetary monitoring and coaching

The Reason Behind

This program was developed as a response to the growing number of loan defaults in France.

Over indebtedness is a situation that concerns more than 200,000 French households. In 3 cases out of 4, it is related to life events such as job-loss, divorce, illness or death which results in reduced income and thus in the inability to continue repaying outstanding loans.

PF is committed to responsible lending with a simple yet challenging vision: improving loan accessibility while proactively fighting indebtedness.

Results

The results are as follow:

- 50% of the customers identified as potentially in a difficult financial situation are indeed vulnerable.

- Out of these 50%, 8 out of 10 accept one of the solutions offered by PF (90% of the cases are solved directly by PF, and 10% are transferred to Cresus)

A follow up analysis will be conducted 6 and 12 months after PF intervention on the customers enrolled in the program.