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SBCS Case Study
SBCS Case Study
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Challenge

A mid-sized small business credit card issuer needed to re-assess their delinquency account procedures to reduce charge-off balances. 

Solution

The issuer joined Argus’s Small Business Card Study (SBCS), which is a benchmark study that includes depersonalized credit card transaction data for approximately 90% of the US small business credit card market.  Through this participation, Argus provided the issuer with external visibility on their performance relative to both the industry overall and a group of the bank’s peers.  The SBCS benchmark reports included key metrics on portfolio performance and profitability, encompassing: credit lines, parent/child relationships, fees, payment amounts, payment patterns, yield, pricing, and more. 

Results

The issuer learned they were reducing credit lines less often among early-stage delinquencies, which drove higher average charge-off balances relative to their peers.  As a result, the issuer accelerated its credit line decrease programs to reduce exposure faster.  They reduced their average charge off balance by $500 per charged off account, which drove a 10% reduction in gross loss rates.


After providing US issuers with valuable information on their consumer credit card portfolios, Argus’s customers asked for a similar study on small business cards. In response, Argus launched its US Small Business Card Study in 2004. The study has quickly established itself as the most accurate source of industry benchmarking information and today nearly all major US small business card issuers currently participate.

In the current market most agree that small business borrowing has fallen during the recent recession. In order to succeed, it’s more important than ever for small business issuers to utilize detailed analysis and accurate benchmarking tools to effectively measure their profitability and compare their performance to the competition.

Argus’s benchmarking data makes it possible to evaluate an issuer’s programs relative to customized benchmarks of similar programs. Issuers are able to compare their portfolios to peers on many dimensions across the customer lifecycle, including:

  • The competitive positioning of new account pricing, line assignment, and promotional offer usage
  • Ongoing line management strategies, including line assignment by risk score band, line increases and decreases, and utilization
  • Strategies for balance generation, including the use of promotional rates among mature customers, spending generation, balance transfer and cash advance activity, and payment behavior
  • Fee assessment practices, including the strictness of punitive fee assessment, average fee amounts, and waiver rates
  • Risk management performance, including account- and asset-level roll rates, balance control ratios, payment behavior, and charge-off performance.

Participants benefit by:

  • Accelerating profit through actionable customer insights
  • Targeting the right customers with the right offers
  • Identifying performance gaps relative to peers
  • Building competitive intelligence through continued use and refinement
  • Rapidly designing and quantifying potential impact of customer management activities.