As the World Turns – OR – As the Address Changes
We recently published a new White Paper – “Dealing Effectively with Address Changes – A Best Practices Approach”. In this White Paper, we discuss how address changes typically cost institutions over $12 per change and how there are hundreds and thousands of soft dollars that go unrealized.
This information has been gathered over the past 10 years since we started the company. What is amazing to me is how much has been learned, how truly important an address change is and how many places a seemingly simple address change touches operationally.
Ten years ago – all we were thinking about was fraud. We knew that typical account takeover identity theft occurs when the thief changes the address from the victim to one they control and they then request cards and checks to be delivered to the alternate address. ID Insight was created to solve for this by using data and analytics to detect high risk address changes. Eg. John Smith is suddenly moving from a 3,000 square foot home in suburban Minneapolis 1,200 miles away to a vacant lot in New York City.
While the fraud aspect of the address change is important – there is so much more at stake. For example, Return Mail is a large operational problem for most financial services companies. The majority (75%) of all Return Mail is driven by address changes. Also – with the Red Flag rules, institutions now have to screen address changes. The majority of institutions opted to send first class security letters out to the customer indicating the change of address. This cost is not trivial.
While the fraud and compliance numbers are bad enough, they pale in comparison to “Lost Opportunity”. For those that send security letters – they also are forced to put a hold on sending our replacement cards. This results in lost interchange revenue. Also – the latest survey results indicate that 50% of customers that change their address will leave their primary financial institution. This results in the loss of hundreds and thousands of dollars in revenue.
In addition, when people move, they tend to have very different financial needs. For example, the young couple moving out of an apartment into their first home probably has different needs than the recently retired empty nesters that are down-sizing. While all of this is very logical – the common approach for financial institutions is to send a two line letter:
“Dear John, We have record that you recently changed your address from A to B. If this isn’t you please give us a call”.
What John is trying to tell you is
“Dear Primary Banking Institution, my wife and I just moved into our first owned home and we are getting ready to spend thousands of dollars. I am currently deciding on which cards I will use for all my new purchases. Also – I used to live 1 mile from your branch and am now 10 miles away. As such – I am considering moving my $20,000 Money Market and Savings Account to a different bank that is a little closer to my new place”.
Check out the new White Paper. It is 180 degrees away from where we started nearly a decade ago. I am sure that we will continue to learn in the years ahead.
Contributed By – Adam Elliott