Automated Financial Product Migration Risk Evaluation

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Solution Overview

Problem

Financial institutions face challenges in migrating customers from free financial products to fee-based alternatives due to high customer attrition risks, which can offset increased revenue.

Innovation Solution

The development of automated systems and methods for pre-migration testing and risk analysis to identify eligible customers, assess attrition risks, and optimize product characteristics to minimize migration-related losses, including communication of migration notices and post-migration risk mitigation strategies.

Engineering Contradictions & Design Principles

VSEngineering Contradiction Analysis

1Loss of energy

If customers are migrated from free financial products to fee-based alternative products, then revenue increases, but customer attrition risk increases

Engineering Contradiction:

ImproverevenueVSAvoidcustomer retention

Core Design Contradiction:

Loss of energyVSReliability

Solution Approach 1:

The system performs pre-migration testing on a subset of customers before full migration implementation. This preliminary action involves sending migration notices to test groups, monitoring their responses, and analyzing attrition patterns before committing to full-scale migration, thereby identifying at-risk customers in advance

Inventive Principle:

Principle #10Preliminary action

Solution Approach 2:

The system implements continuous monitoring and feedback loops during the migration process. Migration notices are sent to test groups, customer responses are tracked, attrition risks are analyzed, and migration strategies are adjusted based on this feedback before full implementation, allowing dynamic optimization of migration timing and targeting

Inventive Principle:

Principle #23Feedback

2Measurement precision

If pre-migration testing is conducted on a large subset of customers, then migration risk assessment improves, but time and resources increase

Engineering Contradiction:

Improveattrition risk assessment accuracyVSAvoidmigration preparation time

Core Design Contradiction:

Measurement precisionVSLoss of time

Solution Approach 1:

The system applies partial action by conducting pre-migration testing on a strategically selected subset of customers rather than the entire customer base. This subset is sufficient to identify attrition patterns and calibrate risk models without requiring exhaustive testing of all customers, balancing accuracy with efficiency

Inventive Principle:

Principle #16Partial or excessive action

Solution Approach 2:

The system uses statistical parameters and thresholds to determine the minimum necessary test group size for reliable attrition risk assessment. By optimizing these parameters, the system identifies the smallest sufficient sample size that still provides statistically valid predictions, reducing unnecessary testing time and resources

Inventive Principle:

Principle #35Parameter changes

Data Source

PatentUS8762194B2Systems and methods for evaluating alternative financial products

Publication Date: 2014.06.24 FISERV INC

AI summary

Systems and methods for evaluating alternative financial products are provided. A first financial product offered by a financial institution may be identified, where one or more customers of the financial institution are eligible for migration from a second financial product to the first financial product. An attrition risk associated with migration of the one or more customers to the first financial product may be determined. If the attrition risk satisfies a threshold, then migration of the one or more customers to the first financial product may be directed. Otherwise, if the attrition risk fails to satisfy the threshold, then one or more characteristics associated with the first financial product may be modified.