ALI Solutions Reports Lower Charge-Offs and Delinquencies for Credit Card Client

Austin, Texas–ALI Solutions™, the leading provider of event-based analytic solutions, announced the success of its year-long EarlyDetection System initiative at a leading North American credit card issuer that wished to identify new cardholders whose day-one activity indicated high risk of charge-off.

ALI’s client recorded a 31 percent reduction in balances more than 30 days past due and a 23 percent reduction in number of accounts more than 30 days past due, compared to a control group. Charge-off balances are down 13.7 percent and charge-off rates are down 4.5 percent. Customer attrition rates have not increased.

The client, which operates a large chain of retail stores in addition to providing financial services, has a stake in quickly extending credit to credit-worthy customers but wanted to make sure it could recognize and mitigate risk early in the life of the account. Traditionally and even today, most issuers can risk-score new accounts only after 30 days of usage, but recovery options dwindle and charge-off probability rises quickly over time making early detection a powerful risk-mitigation strategy.

The company chose ALI Solutions’ ActionOptimizer™ for Early Detection (“EDS”) to score new accounts on the first day’s transaction activity. The system aggregates application and bureau data with the day-one transaction activity to produce a risk score that predicts the likelihood that the cardholder will quickly run up balances and not pay them off.

Tom Miller, Senior Vice President for ALI Solutions, said, “Our client’s strong results support our contention that early risk detection is superior risk management. Now we can help our clients take preemptive action immediately on their higher risk accounts with a full range of options, from a soft collection call to blocking further purchases or cash transactions. Just as important, they can act on the low-risk accounts, possibly increasing credit limits, and more confidently manage the balance growth of new accounts. We see no limits to how early detection can make our clients better at extending credit to the right customers and protecting their shareholders against unnecessary loss.”

Miller added, “These results prove the fundamental principle of our solutions: preemptive risk management, pre-delinquency action. Waiting 30 days to discern a good risk from a bad risk is not sufficient these days, not when research says that customers who ultimately don’t pay have a propensity to have already used 90 percent of their available credit in the first 30 days. Taking action before accounts become delinquent can amount to an optimal risk position.”

ActionOptimizer™ for Early Detection has been successfully deployed as a direct implementation as well as hosted through a card processing platform. This provides clients complete flexibility depending on their IT, business and operational requirements.

About ALI Solutions
ALI Solutions (“ALI”) provides event-based analytic decisioning applications that empower consumer financial services organizations to preemptively manage risk and improve profitability. ALI’s solutions automate the fusion of transaction data with third party data sources to dynamically execute credit, fraud and collections policies that solve immediate business problems while easily adapting to future industry challenges. For over 16 years many of the world’s most successful companies throughout North America, the United Kingdom and the Asia Pacific region continue to choose ALI because its applications are proven to help businesses mitigate losses while delivering millions of dollars in bottom line benefit. For more information, visit www.ALIsolutions.com. (On April 6, 2009, ALI Solutions changed its name from Austin Logistics, Inc.)