There is an interesting article on Improving New Account Opening that has some great points, all valid. But we seem to be talking in circles at times. We develop something and the bad guys develop something that defeats what we have built, then we develop something and the bad guys develop… well you get the message.
Maybe we need to step back a bit. We are always attempting to develop some solution that is a complete algorithm for our problem. If we can synthesize or boil down the problem into a totally logical fashion then we can program it and this technique will solve the problem. Most times this works but then the problems occur with the exceptions. Those things that we haven’t thought of in a totally logical fashion. There is always the random point of existence. That is life. Personally that is the beauty of life. Business wise that may be the problem you end up dealing with.
Can we handle problems only through algorithms? Yes but only to a certain point. For larger organizations it is vital to do this, for smaller ones they have an advantage in using the human factor. We need to use our human facilities to handle what the algorithm can’t. Now if we are dealing with costs we choose the least cost method, business is business. But if we are building a business on relationships, on word of mouth marketing, on giving service that one can be proud of, then the least cost method doesn’t work. We need to be able to manage those situations on a personal basis. Without the intervention of a person when needed, people will say you are just like the rest of the businesses that they have had to deal with and don’t care. And that doesn’t make them very happy. Maybe that new account doesn’t have a great credit rating but instead of summarily rejecting the application call the person and ask the reason. I remember asking a young person that question. Her answer was that she broke her leg at work and between Employment Insurance, Workers Compensation and the insurance company she didn’t receive any money for close to 6 months. Her credit was “bad” but all her reasons were “good”.
So when you begin to build your model to manage risk consider this — include the human component in the process and in dealing with the exception. It may cost you a little more but you will be building something that people want, appreciate and respect. And they will tell their friends.