Payments Innovation

Payments 2016: The Year of Payment Innovation Via Predictive Analytics

Guardian Analytics

PYMNTS consulted 21 payments executives from across the industry to share their insights on the biggest takeaways from 2016 as part of the “Payments 2016, The Year Of …” eBook. We posed the same question to each executive:

If you had to answer the question, Payments was the year of …, how would you answer, and how does your answer change your world — and the world of payments, more broadly?

Here is the response from Joe DeCosmo, chief analytics officer of Enova International …

Payments 2016: The Year of Payment Innovation Via Predictive Analytics

This was the year for payment innovation through predictive analytics. At Enova International, provider of online financial services to non-prime consumers and small businesses, we see innovation driving business performance, growth, customer satisfaction and bottom-line results. Enova’s 2016 payment innovations were powered by our real-time predictive analytics and on-demand decision-making technology. These tools, offered through our Enova Decisions™ real-time predictive analytics service brand, help Enova’s consumer and small business brands make data-driven operations decisions, instantly and at scale, in order to meet customer expectations for instant answers and exceptional service.

Through Enova Decisions, we were able to innovate and optimize our operational payment processes by building and implementing our Smart ACH™ solution. Smart ACH was created not only to help meet NACHA compliance rules, but also to improve operational efficiency and the customer experience. With dedication to compliance and responsible lending practices, Enova’s online financial services use Smart ACH to keep return rates below 15 percent per NACHA requirements. Smart ACH uses a proprietary model to identify consumers who will be least likely to be able to make their next scheduled payment. Once identified, the ACH attempt is turned off, saving customers overdraft fees. Enova also avoids unnecessary ACH fees in this way.

For example, one Enova brand reduced overall return rates and optimized the success of debit attempts with Smart ACH. Without it, Enova would be faced with $18 million in projected losses from canceling payments to reduce the return rate below 15 percent. With customized Smart ACH models, Enova was able to more deliberately decide when to send or cancel a payment, reducing canceled payment loses by $8.5 million annually.

Enova’s world of providing access to credit changed in three major ways because of innovations in payment analytics:

  1. We were able to maximize the success of our debit attempts to help mitigate or minimize overall return rates and fees for increased profitability and operational efficiency.
  2. We improved our debiting practices to optimize overall clearance rates for compliance with NACHA rules.
  3. We improved our customer experience by minimizing ACH returns, saving customers from overdraft fees by canceling payments likely to return due to insufficient funds.

Predictive analytics for payment innovation changes the world of payments more broadly by offering all companies involved in ACH payments the ability to improve their operations, increase profitability, ensure compliance and, most important, improve their customer experience. Making more intelligent debiting decisions can be the difference between optimized operations — or not operating at all. Predictive analytics were here to help companies innovate throughout 2016 and will continue to change the face of payment through 2017 and beyond.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The May 2019 PSD2 Tracker Report, is a go-to, monthly resource for updates on trends and changes regarding PSD2 and other privacy and data protection regulations.

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