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New software could change how banks market their products

Published: 24 October 2003

New management software that seeks to tailor offers on loans, overdrafts or credit cards to meet an individual customer's wishes and increase the likelihood of them being accepted has been developed by management researchers at the University of Southampton.

The new tool would enable banks to recognise the characteristics of their customers as soon as they begin filling in an online application form and to devise an attractive offer package by the time the form has been completed. This could dramatically change the way financial institutions market their products especially on the Internet or over the telephone.

To develop and test this software, the research team, led by Lyn Thomas, Professor of Management Science at the University, has created a Fantasy Student Current Account which enables them to determine the probability of a set of students with certain characteristics accepting or rejecting a bank account with a range of features.

The 'account' is based around a website that mimics an online application form for a student bank account and contains information on the characteristics of 331 applicants obtained from another website. The task is to determine whether an applicant with certain characteristics will accept or reject an offer that contains certain features.

The researchers are offering cash incentives to students to encourage them to complete the application form and to decide whether they would accept the product offered, making it clear to them that this is an experimental exercise. Management probability techniques are being used to determine the optimum set of offer parameters for students with specific characteristics.

"Our techniques could change how banks operate in five to ten years time," comments Professor Thomas. "We all want different things from bank accounts. For example, all students are very keen on overdraft facilities but some want a credit card as well while others may prefer discounts on insurance. At present, banks don't have the technology to do the kinds of calculations to make these judgements, but these new mechanisms could save them time during the application process and enable them to offer products that their customers will accept."

Notes for editors

The University of Southampton is a leading UK teaching and research institution with a global reputation for leading-edge research and scholarship. The University, which celebrated its Golden Jubilee in 2002, has 20,000 students and over 4,500 staff and plays an important role in the City of Southampton. Its annual turnover is in the region of £235 million.

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