Thought Leaders in Financial Technology: Ed Wallen, CEO of C&R (Part 2)

Sramana Mitra: Let’s do use cases. You talked about AI models. Where are you firing AI models to achieve what use cases?

Ed Wallen: It’s really on a number of different facets depending on the nature of how our client operates. Generally speaking, the most common are the propensity-to-pay models. They’re action-effect models. What actions are going to lead to the desired outcomes? There’s also mathematical optimization based on the characteristics of this archetype or account. What is the optimal strategy or treatment to put them on that’s going to lead to the desired business outcome?

It’s shifted from liquidate, liquidate, liquidate, and not treating that customer well and trying to get what you can out of them to recognize that the cost of customer acquisition is so high. What can we do with this person’s situation to help them through this tough time? What are the right actions that are going to lead to the effects that we want? That varies widely based on who these different customers are and then really being able to do that at scale. I’ve got nine of the top ten US banks. I’ve got five of the top six UK banks. We’re talking about tens of millions of accounts. You have to do this at scale. Our mantra is humanity at scale.

Sramana Mitra: Can you give me some examples of humanity at scale? Describe to me a particular scenario.

Ed Wallen: Let’s say that there’s a death of a spouse and there’s a loss of income and expenses for the funeral. The person is going to collect some insurance on that. That may take some time. Instead of trying to put them down a path of increasing interest rates and adding on fees and treating them in such a manner that’s just going to add to the problem, the best action may be forbearance. We’ll pick back up once things get more stable.

Sramana Mitra: Can we do a few more examples? This is very helpful. What you just did is illustrate the humanity aspect very well. What you described is perfectly model-able with AI.

Ed Wallen: There are all sorts of scenarios around natural disasters and war. I have clients and their customers in Ukraine as well as the surrounding countries. We’ve got a huge presence in Poland. Are they taking on relatives that are now coming in and creating more hardship there? Is there government relief that’s coming on the back of that? It’s getting down to very granular segmentation. The global pandemic has been an interesting one that has changed the game quite substantially here, especially in 2020. That was a new scenario for all of us.

Sramana Mitra: We’ve got a flavor of the different types of scenarios that require or warrant humane treatment. What is the format in which you deliver that treatment? Is it AI making its own decisions or are human beings picking up the phone and talking to these people and working through those solutions?

Ed Wallen: It’s a combination of both. I’ll try and do a more detailed walkthrough of this scenario. Let’s say it’s a job loss. We’re having an economic downturn and someone loses their job. Based on that, what our software does is, it takes all of their income outside of this job and all their expenses and determines what is affordable. What are the expenses that are absolutely critical for their livelihood? They need to be able to pay their rent. They need to be able to keep their electricity and water on before trying to collect a late credit card fee.

We’re really trying to capture all of that information and to make decisions on it based on what is available as levers to pull.

From a human perspective, we try to set up the treatments as configurations within the software. For extenuating circumstances where we identify that there are exceptional cases that have to be dealt with by a human being, then we push that to a call center. It’s intelligently routed based on the skillsets that can deal with those sets of exceptions.

This segment is part 2 in the series : Thought Leaders in Financial Technology: Ed Wallen, CEO of C&R
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