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Citizens using robots, analytics to make home equity loans, process fraud claims

At Citizens Financial Group Inc., robots fill out the chargeback fraud claims.

Citizens Financial has been using robots, software and analytics to automate routine processes and expedite approvals and fulfillments in recent pilots, with the initial results promising enough to expand across the broader company.

Analytics have enabled the bank to spend less on marketing by sending targeted direct mail with offers and promotions to the customers most likely to want certain financial products and services, said Brad Conner, head of consumer banking, during an investor presentation on May 31. The bank has seen a 35% increase in marketing responses in 2016, even as marketing execution costs declined 25%.

Citizens is also using analytics to reduce fulfillment time following an application for a home equity line of credit. The bank uses the existing data it has about a customer, including their credit score and the value of their home, to make a targeted offer for a home equity line of credit. If the customer applies for the product, the bank can expedite approval, having already assessed creditworthiness. He said this has led to greater customer satisfaction and lower operating costs. The bank is now in the process of expanding the HELOC automation pilot across its mortgage business and other lending classes.

Conner said the bank is also using robots and automation in processes like chargebacks following a fraud claim. After a customer submits a fraud claim, the bank credits the charge and then processes what he called a chargeback to the merchant. Using a robot in fraud claims reduced the process time from eight minutes to two minutes; the programs have processed 35,000 chargebacks since the pilot began.

Conner said the bank also sees several lending lines, including education lending, as unique differentiators among peers that expose the bank to a potentially lucrative customer base. Education originations, including in-school and refinancing, have increased about 280% between 2014 and 2016, to $1.9 billion, according to the company. Refinancing loans make up 75% of education lending, and are a differentiated product targeting an attractive younger demographic that Conner pointed out have stability and high creditworthiness. He said the bank is "very bullish" on education lending and called it a "sweet spot" for the bank.