First-Time Defaulters: An Underappreciated Customer Segment?

The impact of the housing crisis is reaching far and wide, and default rates are increasing in unusual populations. According to the research firm Deliotte, 11 percent of all banking customers had a negative issue with credit in the past two years. Although the financial industry is treating these first-time defaulters as if they might be a long-term risk, Deliotte argues that the economic recession is most likely to blame not necessarily the customer. Deliotte also believes that many of these customers experiencing default for the first time should be able to resume their positive credit records once the economy recovers. For this reason, the firm is urging banks to consider first-time defaulters as a different category suggesting that consumers will gauge future banking plans on the lenders’ response to their situation and whether or not they were listening and offering useful solutions.

SOURCE: DS News, 2/21/11

URL: http://www.dsnews.com/articles/first-time-defaulters-an-underappreciated-customer-segment-2011-02-21