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This document is confidential, is intended solely for the addressee and its employees, and is not for distribution to any third party without the
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© 2020 TransUnion LLC All Rights Reserved | 2
In today’s session we will cover:
• Global context of COVID-19 Lee Naik: Chief Executive Officer
• Insights from global crises Carmen Williams: Head of R&C
• SA prior to COVID-19
• Market scenarios and forecasts
• Treatment strategies to consider Tim Collins: Chief Product Officer
• Wrap-up Lee Naik: Chief Executive Officer
© 2020 TransUnion LLC All Rights Reserved | 3
COVID-19 is the number one threat globally
© 2020 TransUnion LLC All Rights Reserved | 4
COVID-19 is currently the number one threat globally, however in order
to manage this risk a proactive data drive approach is important
• COVID-19 is currently the biggest risk globally, having grown eleven-fold in the last four weeks; with SA reporting it’s
first case on March 5th
• This will have a significant implications on global growth and job security with the repercussions being felt in SA
• Prior to the COVID-19 crisis, SA’s economy was already predicted to have a bleak 2020 after ending 2019 in a
technical recession, furthermore, the IMF expected a 0.8% growth in 2020; all of which is expected to weigh heavily on
the consumer landscape
• Although, SA has taken swift action to flatten the curve, early indicators show that infection rates have grown thirteen-
fold in the last three weeks
• In order to mitigate, manage and reduce the subsequent risks TransUnion has developed a playbook to assist the
credit, telco and insurance market across the engage, acquire, manage and collections lifecycle
• Hence, in this presentation we will provide:
‒ Further context into how the global and local landscape may shape the future consumer landscape
‒ Share impact assessments into how the key drivers of the credit, telco & insurance market may be impacted
given COVID-19
‒ Articulate actionable treatment strategies & success stories across these industries which can be deployed to
help navigate the COVID-19 crisis
© 2020 TransUnion LLC All Rights Reserved | 5
Our data driven analysis indicates three possible scenarios that will
influence the Banking, Retail, Telco & Insurance industry
• We followed a data driven approach by baselining the trajectory of the Banking, Retail, Telco &
Insurance industries to a pre-COVID-19 world with a view of how macroeconomic and new business
activity would influence these industries
• This led us to three scenarios:
Rocky is an underdog story Lemonade is about coming I am Legend refers to a
that links to SA being in a to terms with the impacts of worst case scenario likely
tough spot but bouncing COVID-19 and businesses worse than ever
back from this crisis by Q3 managing it as part of their experienced where the
2020 BAU strategies with repercussions will be
softness felt throughout significant and long-lasting
2020
© 2020 TransUnion LLC All Rights Reserved | 6
Global
Global Context
© 2020 TransUnion LLC All Rights Reserved | 7
COVID-19 is currently the biggest threat globally, having grown eleven-
fold in the last four weeks; with SA reporting it’s first case on March 5th
Global Cumulative COVID-19 Confirmed Cases
Number of confirmed cases, ‘000 ~11x growth in
~4 weeks Jan, 22nd
1,400 April, 2nd
1,272 500 confirmed
1,200 cases ~1mn
confirmed
1,000 cases
800 720
600 11X growth in
~6x growth in
378
400 ~2 weeks the space of 4-
182 weeks
200 77 106
10 60
0
Jan.22 Jan.29 Feb.05 Feb.12 Feb.19 Feb.26 Mar.04 Mar.11 Mar.18 Mar.25 Apr.05
December 31st January 30th February 14th March 5th March 11th March 23rd
China alerted WHO declared Africa has it’s first First case WHO declared President Cyril
WHO of “Unusual. COVID-19 a Global case confirmed confirmed in the outbreak a Ramaphosa announced
Phenomena” Emergency (Egypt) SA pandemic 21day lockdown
January 23rd January 31st March 8th March 15th
Wuhan placed Italy confirmed Italy placed the President Cyril Ramaphosa
in “effective first COVID-19 38 days entire country announced his initial set of
quarantine” case on lock-down measures to stem the
(~cases 7375) COVID-19 pandemic
Source: John Hopkins University (https://data.humdata.org/dataset/novel-coronavirus-2019-ncov-cases) & Press Searches
© 2020 TransUnion LLC All Rights Reserved | 8
COVID-19 will have significant implications on global growth and job
security with the repercussions being felt in SA
Pre-COVID-19 World Post COVID-19 Implications
Pre and Post COVID-19 Impact
The macroeconomic landscape was
Market consensus is that COVID-19 will
already fragile to begin with:
Excepted Global GDP Growth have a notable negative impact on
• The global economy was expected to 2020,% global growth:
match or slightly underperform 2019 levels
3 • 82% of economists believe that COVID-
driven by a reduction in manufacturing
19 will cause a major recession3
activity
• Over half believe an economic downturn
• Monetary policy has limited room to
-1 to -31 of greater than 2% is likely and a
maneuver given lower interest rates & Pre-Covid Post-Covid further quarter believe that a downturn
large balance sheets of central banks (end 2019) (end 2020)
of greater than 3% downturn is likely4
Global Unemployment
2020, M
Unemployment was projected to be stable 3% to
13% Unemployment is expected to worsen:
with efforts around labour utilisation
188 193 to 2132 • Worse-case, mid and best-case scenario
being prioritised
of global job losses at 23M,13M & 5M,
• Current projections show an increase in
with worse-case levels above those
unemployment of 2.5M2 per year (as Pre-Covid Post-Covid seen during the 2008-9 recession
demand outstrips supply) (end 2019) (end 2020)
(22M jobs were lost)2
1 – Econometrics, Bank of America & Morgan Stanley; 2 – International Labour Organisation; 3 – IGM Forum & 4 – Focused Economics
© 2020 TransUnion LLC All Rights Reserved | 9
Source: Econometrics, Focus Economic, World Bank, Investec, International Labour Office (ILO)
SA has taken swift action to flatten the curve, however, early indicators
show that infection rates have grown thirteen-fold in the last three weeks
South Africa Cumulative COVID-19 Confirmed Cases
# of confirmed cases
~13x change in Mar, 5th March, 23rd
Over the same 32 day period
2,000 ~3weeks First SA case National
Italy had 2036 cases vs.
1,655 confirmed shutdown
South Africa’s 1655 cases
1,462 announced
1,500
1,000 March, 19th
709 Health Minister
500 announces
116 that infection
1 17 rate may reach
0
Mar.05 Mar.12 Mar.18 Mar.25 Apr.01 Apr.05 60 – 70%
March 5th March 22nd March 27th April 3rd April 6th
First case confirmed SBSA1 announced payment Moody’s Investor Services Fitch downgraded SA’s SARB announced 2 - 4%
in SA by Minister of holidays for select business cuts South Africa’s investment credit rating to BB with reduction in SA’s GDP & 370k
Health Zweli Mkhize customers & student debt relief grade to Ba1 negative outlook job losses for 2020
March 15th March 23rd March 29th & 30th April 4th
President Cyril Ramaphosa President Cyril SBSA, ABSA, FNB announced ZAR breached R19.00/$
announced his initial set of Ramaphosa announced direct relief via payment holidays mark following downgrade
measures to stem the 21 day lockdown for customer, business & by rating agencies
COVID-19 pandemic corporates clients (rules vary)
1 – Nedbank announces that it will support its clients with suitable individual solutions to cash flow challenges
© 2020 TransUnion LLC All Rights Reserved | 10
Source: World Health Organization (https://data.humdata.org/dataset/novel-coronavirus-2019-ncov-cases) & Press SearchesInsights
TU Insights
© 2020 TransUnion LLC All Rights Reserved | 11During times of crises when events are sudden and consumer spend is
constrained, demand for credit increases while supply decreases
Events are sudden & unexpected
• Governments’ had limited time to prepare
which exacerbated the impact and longevity of
the events
‒ Given the surprise to market, cash reserves
Impacted the credit landscape were put under pressure Reduced consumer spend
Consumer Enquiries • Consumer ability to spend was
• General reduction with the reduced driven by:
exemption of India where loan Summary of TU learnings from
activity increased due to a liquidity ‒ Social immobility (e.g. lockdowns)
demand past crises: ‒ Lack of earning potential given
business shutdowns
Accounts Origination
• All round reduction as lenders ‒ Reduced cash circulation
scaled back on issuance USA Hurricane Katrina • Direct impact on economic growth,
subsequent employment and
Outstanding balances: production as supply chains pulled
• Balances rose as consumer India Demonetisation back
required more liquidity
Portfolio performance Hong Kong Crises
• Delinquency rates spiked primarily
driven by the non-prime risk tier
Source: TransUnion © 2020 TransUnion LLC All Rights Reserved | 12During Hurricane Katrina the negative effects were felt across all
risk spectrums
TransUnion’s Insights
Personal loan origination volumes in impacted regions
‘000 • Hurricane Katrina was a sudden & unexpected event that quickly
32 -39% changed the lives of millions of people:
2 4 • 1,000+ deaths
7 19
2 2 • 1.2 million people evacuated
9
4 • 800,000 housing units damaged or destroyed
9 5
6
• $108 billion in damage
Pre- Katrina Post-Katrina
• This impact was felt in the consumer credit landscape as well as
Super prime Prime plus Prime Near prime Subprime the lending industry, both of which were negatively impacted
• Personal loan origination volumes declined 39% overall and across
3+MIA in 24 months post-origination (PL account-level) all risk levels in the aftermath of the hurricane costing lenders
% millions in expected new business
21
Consistent reduction in performance 16
across on risk-tiers 11 We found Personal loan performance deteriorated disproportionately in
10
7 the impacted region, primarily driven by the non-prime risk tiers
5 5
1
3 2 • This occurred despite the implementation of payment holiday
0 1
initiatives
Super prime Prime plus Prime Near prime Average PL Subprime
Furthermore, the impact was felt across all risk spectrums
Pre-Katrina Post-Katrina
Source: TransUnion US consumer credit database
*Pre-Katrina: Loans issued August 2004-July 2005; Post-Katrina: September 2005-August 2006; Control geographies are all personal loans
issued outside of Louisiana and Mississippi © 2020 TransUnion LLC All Rights Reserved | 13India’s Demonetisation had varying impacts on the credit
landscape as consumers searched for liquidity
Situation TransUnion’s Insights
Common Questions to COVID-19
India demonetisation event was sudden and Consumer enquiries
unexpected, and caused significant • Consumer demand for new loans increased
uncertainty and temporary economic • The risk profile of those seeking new credit
disruption: did not deteriorate
Would consumer demand for,
and access to, credit Account originations
• On November 8, 2016, the government of fundamentally change? • New loan approval rates dropped
India announced the demonetisation of • Lenders cut back on the issuance of
all ₹500 and ₹1,000 banknotes – over 85% of Would the profile of the new accounts
all currency in circulation consumer seeking and gaining
Credit utilization
credit change? • Credit card balances increased in
• The government stated the action would response to constrained consumer liquidity
curtail the shadow economy and crack Will consumers seek different
down on the use of illicit and counterfeit cash types of loans? Portfolio performance
to fund illegal activity and terrorism • Delinquency rates on certain credit types
Will consumers change how they (PL, Home Loan) increased while credit
use available credit? cards and revolving loan accounts were
• The sudden nature of the announcement— steady or improved as they continued to
and the prolonged cash shortages in the provide access to liquidity
How would consumers perform
weeks that followed—created significant
on their loans following this
disruption throughout the economy,
event? We found that during this economic disruption,
threatening economic output
originations declined, balances grew and
delinquency rates generally deteriorated
Source: TransUnion India consumer credit database © 2020 TransUnion LLC All Rights Reserved | 14Hong Kong’s past crises resulted in a decline in enquiries and
originations, balance growth and delinquency deterioration
Situation TransUnion’s Insights
Hong Kong is a case study on the twin-fold Common themes across Consumer enquiries
impact of the pandemic and social/market crises • Given the lower demand for credit in a crisis, new
decline can have on an economy: application enquiries were down ~20% during SARS
Healthcare system was placed and ~8% during H1N1
• Hong Kong has experience three large under stress2
scale economic shocks over the last Account originations
decade: • New credit card originations decreased by ~19%4
‒ SARS and a stock market crash 2002/031
Varying level of quarantine • Number of new unsecured loans opened fell by
measures instituted2 14%4
‒ Bird Flu (H1N1) and the global financial
crisis 2008/09 Outstanding balances
‒ COVID-19 and political unrest 2019/2020 Education system impacted with • Average outstanding balances rose ~4% for
schools being closed2 credit cards and personal loans4
• Lessons were learnt from past events,
which forced the Hong Kong government to Portfolio performance
Prolonged lockdown resulting in • Credit card 3+MIA (bal) delinquency rates rose by
react rapidly and implement strict control extended Work from home
to contain COVID-19, these measures have ~25% during SARS and ~33% during H1N1
arrangements • Average write-off rates for credit cards and personal
seen the disease being relatively contained
loans rose by ~14% & ~33%4
vs. the China & Italy experience Reduction in GDP post-each -
crisis We found that during these crises, enquiries declined,
originations decreased, balances grew and portfolio
performance deteriorated3
Rapid increase in
Generally, activity, utilisation, delinquency and charge off
unemployment during each
levels returned to below pre-crisis levels two quarters
crisis
after the crisis
1 – No credit bureau during the SARS period; 2 – Comparison between SARS & COVID-19; 3 – All analysis compared the crisis period to the pre-crisis period; 4 –
H1N1 specific insights
Source: Honk Kong Monetary Authority & Transunion Hong Kong © 2020 TransUnion LLC All Rights Reserved | 15SA
SA Prior to
COVID-19
© 2020 TransUnion LLC All Rights Reserved | 16BANKING END 2019
Unsecured products have shown high balance growth while delinquencies
remain relatively stable – secured delinquencies deteriorate at pace
Concern
VAF Home loan Credit Card Bank PL
YoY % change in
originations 1.6% 10.0% 1.8% 30.5%
YoY % change in
total
outstanding 7.7% 7.4% 17.9% 9.0%
balance
YoY % change in 0.3%
serious 1.9% 0.9% 0.6%
delinquency rate
Note: YoY refers to Q4-18 vs Q4-19 © 2020 TransUnion LLC All Rights Reserved | 17
Source: TransUnion SA consumer credit databaseRETAIL END 2019
Generally, the retail industry was stable with overall growth noted in
both originations and balances as delinquency trends vary by product
Concern
Non-bank Personal Clothing Retail Revolving Retail Instalment
Loans
YoY % change in -12.9% 4.1%
originations 8.1% 2.6%
YoY % change in
total
outstanding 31.6% 4.2% 10.4% 6.9%
balance
YoY % change in 2.7%
serious 4.9% 2.0% 0.5%
delinquency rate
Note: YoY refers to Q4-18 vs Q4-19 © 2020 TransUnion LLC All Rights Reserved | 18
Source: TransUnion SA consumer credit databaseTELCO & INSURANCE END 2019
Both industries experienced a slowdown in new acquisition / policy
growth in 2019 as a result of tough economic conditions
Concern
Telco Short-Term
Insurance
YoY change in -37.3% YoY change in -4.1%
new acquisitions new policies
YoY % change in YoY % change in
subprime new lapsed policies 6
acquisitions 2.0% Months on Book 1.9%
YoY % change in YoY change in
-0.6%
serious average monthly
delinquency rate 3.0% premiums
Note: YoY refers to Q4-18 vs Q4-19 © 2020 TransUnion LLC All Rights Reserved | 19
Source: TransUnion SA consumer credit databaseMarket
Potential Market
Scenarios
© 2020 TransUnion LLC All Rights Reserved | 20Our data driven analysis indicates three possible scenarios that will
influence the Banking, Retail, Telco & Insurance industry
• We followed a data driven approach by baselining the trajectory of the Banking, Retail, Telco &
Insurance industries to a pre-COVID-19 world with a view of how macroeconomic and new business
activity would influence these industries
• This led us to three scenarios:
Rocky is an underdog story Lemonade is about coming I am Legend refers to a
that links to SA being in a to terms with the impacts of worst case scenario likely
tough spot but bouncing COVID-19 and businesses worse than ever
back from this crisis by Q3 managing it as part of their experienced where the
2020 BAU strategies with repercussions will be
softness felt throughout significant and long-lasting
2020
© 2020 TransUnion LLC All Rights Reserved | 21To analyse the impact of COVID-19, we developed scenarios based on
historical trends, macro indicators & projections of new business activity
Hypothesis Base-case Rocky Lemonade I am Legend
(Pre-COVID 19)
• GDP: 1% • GDP: -2% • GDP: -4% • GDP: -6%
• Unemployment • Unemployment • Unemployment • Unemployment
rates: ~29.1% rates: ~30% (7M rates: ~33% (7.3M rates: ~35% (7.7M
(6.7M people) unemployed) unemployed) unemployed)
Macroeconomic • Repo rate stays at • Repo rate reduced • Repo rate cut to • Repo rate slashed to
Variables 5.25% 5% 4.25% 3.25%
• CPI: 4.5% • CPI: 5% • CPI: 10% • CPI: 20%
• Disposable • Disposable income: • Disposable income: • Disposable income:
income: 28% 20% 10% 5%
Source: Econometrics, Oxford Economics, SARB, StatsSA, World Bank & International Labour Organisation © 2020 TransUnion LLC All Rights Reserved | 22The Base-case (Pre-COVID 19) suggests low but positive growth across
all industries
Base-case Lemonade
(Pre-COVID 19)
Rocky I am Legend
• Demand and supply appetite
continues its current trajectory
• Utilisation rates < 60%
Banking • Delinquencies continue
& Retail current pace of change
• Lenders focus on acquisition
and account management
• Low growth of new
acquisitions
• Shift in acquisition risk strategy
Telco
to more sub prime
consumers
• Increase in delinquencies
• Average lapses on new
business increase by 1.9%
Insurance • New policies contract by 5%
• Average premium down by
0.6%
© 2020 TransUnion LLC All Rights Reserved | 23Rocky is premised on a recovery by Q3 2020 with marginal deterioration
in acquisitions and an uptick in risk at the sub prime level
Base-case Lemonade
(Pre-COVID 19)
Rocky I am Legend
• Lower appetite post lockdown
• Consumers / Businesses manage
utilisation levels
Banking
• Delinquencies deteriorate (mainly
& Retail
below prime tiers)
• Lenders resume pre-COVID-19
operations within 3 months
• Acquisition will be volatile as the
lockdown period would have served
Telco as a test for clients to understand
their particular connectivity needs
• Uncertainty around payment relief
will result in technical defaults
New business is impacted marginally:
Insurance • Average Lapses increase: 2%
• Volumes decreases: 10%
• Average premium decrease: 2%
© 2020 TransUnion LLC All Rights Reserved | 24Lemonade involves a new normal post-COVID-19 with 2020 being a
difficult period across all industries with a potential bounce back in 2021
Base-case Lemonade
(Pre-COVID 19)
Rocky I am Legend
• Consumer demand for credit
increases but lenders scale back
• Credit utilisation increases
Banking significantly
& Retail • Low risk consumers / businesses
take strain and defaults accelerate
• Lenders manage COVID-19 effects as
BAU and pivot toward a ‘new normal’
• Moderate decline in new
acquisitions
Telco • Forced Digital Disruption: prolonged
WFH initiatives will see a switch from
mobile packages to more fixed-line
products
Moderate decline in affordability and
Insurance disposable income results in:
• Average Lapses increase 4%
• Volumes decreases 20%
• Average premium decrease: 4%
© 2020 TransUnion LLC All Rights Reserved | 25I am Legend is an unprecedented outcome that will be long lasting and
severe across the board as recovery plans take up to 1-year to enact
Base-case Lemonade
(Pre-COVID 19)
Rocky I am Legend
• Dramatic slump in both demand and
lender supply
• Consumers / businesses maximise all
Banking & credit available
Retail • Delinquencies deteriorate drastically
(all risk tiers)
• Recovery plans span up to 1 year
post COVID-19
• Disrupted distribution channels
hamper delivery and fulfilment
Telco • Switch from mobile packages to
fixed line products
• Pre-paid migration
• Postpaid qualification pool dries up
Due to severe decline in affordability and
Insurance disposable income:
• Average Lapses increase by 11%
• Volumes decrease by 40%
• Average premiums decrease by 8%
© 2020 TransUnion LLC All Rights Reserved | 26Past crises and initial data suggest that we will see a reduction in
the quality & volume of credit during COVID-19
Scale of Impact by Scale of Impact by
Q2- 2020 Q2- 2020
*Base case % I am Legend % *Base case % I am Legend %
increase increase increase increase
Origination Volume1 Origination Volume1
Personal 9% ≥-60% 2% ≥ -50%
Credit
Loan
Card
Total Balances Total Balances
4% ≥-30% -2% ≥ 20%
Delinquency rates Delinquency rates
4% ≥ 20% -1% ≥ 11%
Origination Volume1 Origination Volume1
2% ≥ -90% -4% ≥ -90%
Vehicle
Home
Total Balances Asset Total Balances
Loan
1% ≥ -2%
Finance -2% ≥ -3%
Delinquency rates Delinquency rates
-1% ≥ 15% 5% ≥ 14%
*Base case – Pre-COVID-19
1 – Based on TU & industry analysis
Forecasts per product per industry will be available in
© 2020 TransUnion LLC All Rights Reserved | 27
the next iterationPast crises and initial data suggest that we will see a reduction in
the quality & volume of credit during COVID-19
Scale of Impact by Scale of Impact by
Q2- 2020 Q2- 2020
*Base case % I am Legend % *Base case % I am Legend %
increase increase increase increase
Retail Origination Volume1 Origination Volume1
Revolving 9% ≥-60% Non- Bank -1% ≥ -50%
Personal
Total Balances Loan Total Balances
4% ≥-30% 7% ≥ -45%
Delinquency rates Delinquency rates
4% ≥ 20% 10% ≥ 24%
Origination Volume1
Retail -3% ≥ -90%
Installment
Total Balances
2% ≥ -3%
Delinquency rates
0% ≥ 33%
*Base case – Pre-COVID-19
1 – Based on TU & industry analysis
Forecasts per product per industry will be available in
© 2020 TransUnion LLC All Rights Reserved | 28
the next iterationPast crises and initial data suggest that we will see a reduction in
new acquisitions during COVID-19
Scale of Impact by Scale of Impact by
Q2- 2020 Q2- 2020
*Base case % I am Legend % *Base case % I am Legend %
increase increase increase increase
Short- Average Number of Policies Telco New acquisitions
term 2% ≥-39% 2% ≥-40%
Insurance
Lapsed Rates at 6 Months on Book Average Revenue Per Customer (ZAR)
3% ≥37% 6% ≥-20%
Delinquency rates
-11% ≥ 100%
*Base case – Pre-COVID-19
1 – Based on TU & industry analysis
Forecasts per product per industry will be available in
© 2020 TransUnion LLC All Rights Reserved | 29
the next iterationStrategy
Treatment
Strategy
© 2020 TransUnion LLC All Rights Reserved | 30Our data driven analysis indicates three possible scenarios that will
influence the Banking, Retail, Telco & Insurance industry
• We followed a data driven approach by baselining the trajectory of the Banking, Retail, Telco &
Insurance industries to a pre-COVID-19 world with a view of how macroeconomic and new business
activity would influence these industries
• This led us to three scenarios:
Rocky is an underdog story Lemonade is about coming I am Legend refers to a
that links to SA being in a to terms with the impacts of worst case scenario likely
tough spot but bouncing COVID-19 and businesses worse than ever
back from this crisis by Q3 managing it as part of their experienced where the
2020 BAU strategies with repercussions will be
softness felt throughout significant and long-lasting
2020
© 2020 TransUnion LLC All Rights Reserved | 31Businesses should be thinking of their response to the
COVID-19 pandemic in three phases
Now H2 2020 2021 Onwards
Phase 1: Phase 2: Phase 3:
Getting organised Prioritise post-COVID Out the blocks first,
and mitigating the robustness fast recovery
downside
© 2020 TransUnion LLC All Rights Reserved | 32In Phase 1, businesses need to focus on mitigating the immediate
risk and still being open for business
Engage & Acquire Manage & Collect Protect
Mobilise downturn analytical Monitor monitor monitor: Digital Lockdown, reinforce your
decisioning: • Implement extensive monitoring on your digital channels:
• Immediately reevaluate your risk appetite base for changes in behavior e.g. Income • Pandemic related opportunistic fraud is
based on known risks and BCP strategy reduction, Payment Holidays on the increase whilst digital engagement
• Increase reliance on expert judgment and • Partner with external entities to is more important then ever
policy filters as the predictiveness of understand overall market and close gaps • Fraudsters are targeting businesses with
models deteriorates in your existing information e.g. Payment weaker digital ID verification processes,
• However, in the immediate term (< 1 Holiday data enable any existing biometric and device
Phase 1: Month), well built stable models can still authentication capabilities ASAP
Educate your customers:
Getting organised and add value together with these other
• Keep customers informed about the
interventions
mitigating the current circumstances to improve
financial health and loyalty e.g. impact on
downside Credit Report, Payment Holidays, Credit
Life Insurance, Payment Arrangements,
Debt Counselling
Case Study: Local lender has seen a Case Study: Lenders that help Case Study: Local credit provider
30% improvement in response rates consumers self monitor are seeing who implemented digital device
and 10% increase in conversion rates improvements in loyalty (~40%) and authentication was able to identify
during the lock down period thanks to overall credit health (~10%) pre devices using multiple consumer
an effective digital marketing and crisis details and stopped millions of rands
onboarding capability in losses in 1 day
© 2020 TransUnion LLC All Rights Reserved | 33In Phase 2, the real impact will start to be felt and businesses need
to start building capabilities for the new normal
Engage & Acquire Manage & Collect Protect
Start to refactor analytical decisioning Know your customer…..again Expect more fraud
• Too early to rebuild models, will take 9 – • Existing segmentation models may longer • Expect 1st and 3rd party fraud to increase
12 months for a stable base to form hold therefore relook at these using as the real economic effects of the
• Realign / recalibrate certain models additional data points. (e.g. Essential pandemic start to emerge
based e.g. Score to Odds Services Worker)
Know your employee
• Tailor your risk strategy to regions more • Be prepared to counter aggressive “first
• As a responsible employer, start to look
severely impacted by the virus movers” that will target your base,
for any distress in your employees that
continue limit increases and x-sell / upsell
Get future ready with digital channel could result in an increase in their
for good customers / businesses
Phase 2: build out susceptibility to commit fraud. 41% of
• Social distancing will continue to impact Flatten the impairment curve
Prioritise post-COVID physical channels post the lock down e.g. • Monitor transactor versus revolver
economic crime is perpetuated by internal
actors*
robustness branches, brokers, stores behaviour for early distress and revise • Manage suppliers to ensure continuity
• Focus on enabling good customers and pre-delinquency and early stage and protect yourself from any fraud from a
defending against fraudsters, don’t take strategies using trended balance and supplier who may be in distress. 21% of
an authoritarian approach payment information economic crime is perpetuated by
• Allow customers to pay digitally to employee / supplier collusion*
mitigate social distancing concerns
Case Study: Some Italian banks are Case Study: Local lender leveraged Case Study: Local insurer identified
revising their strategies taking into balance, utilisation, shopping habits, employee / supplier collusion
account the geographic impact of wallet share, comm channel, loyalty through consulting services by
COVID-19 in order to better manage data etc. to creating unique identifying ownership links between
prioritisation and delinquencies marketing strategies for each cluster suppliers and employees
Source: *PWC 2020 Economic Crime Survey (https://www.pwc.co.za/en/publications/global-economic-crime-survey.html); **Leadership in the
time of coronavirus: COVID-19 response and implications for banks (https://www.mckinsey.com/industries/financial-services/our- © 2020 TransUnion LLC All Rights Reserved | 34
insights/leadership-in-the-time-of-coronavirus-covid-19-response-and-implications-for-banks)By Phase 3, businesses models need to have changed and ready to
take on the new world
Engage & Acquire Manage & Collect Protect
Rebuild and automate analytical Get a bigger crystal ball Challenge conventional wisdom
decisioning • Existing forecasting processes are largely • Facial and device authentication will
• The new normal with a stable population dependent on internal data, important to become the new norm as fears of the
should start exist to build new models that start leveraging external sources to get an virus kill finger print recognition
consider COVID-19 impact to different outside view of your portfolio • As we learn more, businesses need to
segments evolve their strategies to reflect the “new
Pick your battles…
• Reduce Phase 1 reliance on expert normal”
• Complete a pre-assessment utilising
judgment and policy filters as the new
additional external data sources to
models are implemented to improve
Phase 3: straight through processing
determine payment potential, payment
propensities etc. to better focus your
Out the blocks first, Scale marketing efforts…don’t be last collections efforts
fast recovery • Utilise your new client segmentation, • Be sensitive to collections on consumers
digital channel and analytical decisioning directly impacted by the virus as this
capabilities to aggressively target new could negatively impact brand
business
Case Study: Local lender was able to Case Study: Local lender was able Case Study: A number of
increase conversion rates by 2.5x for to double average product per governments and law enforcement
unsecured lending by developing customer over 3 years using agencies globally have stopped the
bespoke digital communications off shopping behavior to identify next use of fingerprint authentication due
microsegments best product offer to COVID-19 risks
© 2020 TransUnion LLC All Rights Reserved | 35Wrap-up
• Prior to the COVID-19 crisis, SA’s economy was already predicted to have a bleak 2020 after ending 2019 in a
technical recession, furthermore, the IMF expected a 0.8% growth in 2020; all of which is expected to weigh heavily on
the consumer landscape
• Although, SA has taken swift action to flatten the curve, early indicators show that infection rates have grown thirteen-
fold in the last three weeks
• Our data driven analysis indicates three possible scenarios that will influence the Banking, Retail, Telco & Insurance
industry: Rocky (Best Case), Lemonade (Medium Case), I Am Legend (Worst Case)
• Past crises and initial data suggest that we will see a significant reduction in the quality & volume of credit and
insurance due to COVID-19 in SA
• To mitigate this, we believe businesses should be thinking of their response to the COVID-19 pandemic in three
phases: 1) getting organised and mitigating the downside 2) prioritising post-COVID robustness and finally 3) getting out
of the blocks first and having a fast recovery
• Businesses should focus on their competitors response and not just the impact of COVID-19 as this a significant risk
to their future sustainability
© 2020 TransUnion LLC All Rights Reserved | 36Next-Up
• This is the first of a series of webinars that we will be hosting – details to be distributed via
email and posted on our website at the end of the week
• Further Industry specific and client specific analyses are currently being prepared for the
next iteration of the playbook and will be announced in due course.
• Today’s insights study and links to this webinar will be emailed out shortly and will also be
available on our website: https://www.transunion.co.za/insights-events
• For further information on this insights study, requests for specific analyses or more
information on our solutions and insights, please reach out to our team via email
SA_MkrtComms@transunion.com
© 2020 TransUnion LLC All Rights Reserved | 37SPEAKERS’ DETAILS
Lee Naik
Chief Executive Officer Email: Lee.Naik@transunion.com
TransUnion Africa Linkedin: linkedin.com/in/naikl/
Carmen Williams
Head of Research & Consulting Email: Carmen.Williams@transunion.com
TransUnion Africa LinkedIn: linkedin.com/in/carmenwilliams10/
Tim Collins
Chief Product Officer Email: Tim.Collins@transunion.com
TransUnion Africa LinkedIn: linkedin.com/in/timcollins7/
© 2020 TransUnion LLC All Rights Reserved | 38You can also read
